a16z Podcast - Growth in Turbulent Times

Episode Date: May 15, 2020

 In normal times, every company operates against some hypothetical growth model—a data-driven framework that describes how your product grows and how you acquire new users. These, of course, are not normal times. In the fallout from the pandemic, most founders and CEOs are in the process of completely revamping their growth models from the bottom up amid new and unpredictable consumer behavior. This episode explores how to think about growth in turbulent times, according to two growth experts: a16z general partner Andrew Chen, who previously led the growth team at Uber, and Brian Balfour, formerly the VP of Growth at HubSpot, now the founder and CEO of Reforge, a masterclass in growth strategies (in conversation with host Lauren Murrow).The discussion spans four sections: first, how to reassess your existing growth model, particularly when, as Brian says, the data is "completely messed"; next, we drill down into strategy and tactics for surviving the current crisis and talk about how founders can pursue growth even in the midst of widespread uncertainty and cutbacks. Third, we look ahead to discuss scenario planning and how leaders can forge a path forward. Finally, we zoom out and assess the big picture: how various categories of company may be impacted long-term, how this crisis compares to 2008 (and what that means for early-stage founders), and the industries and business models that are now prime for growth.  

The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi, and welcome to the A16Z podcast. I'm Lauren Murrow. In normal times, every company operates against some hypothetical growth model, a data-driven framework that describes how your product grows and how you acquire new users. These, of course, are not normal times. In the fallout from the pandemic, most founders and CEOs are in the process of completely revamping their growth models from the bottom up amid new and unpredictable consumer behavior. This episode explores how to

think about growth in turbulent times, according to two growth experts, A16Z general partner Andrew Chen, who previously led the growth team at Uber, and Brian Balfour, formerly the VP of Growth at HubSpot, now the founder and CEO of Reforge, a masterclass in growth strategies. The discussion spans four sections. First, how to reassess your existing growth model, particularly when, as Brian says, the data is completely messed. Next, we drill down into strategy and tactics for surviving the current crisis and talk about how founders can pursue growth even in the midst of widespread uncertainty and cutbacks. Third, we'll look ahead to discuss scenario planning and how leaders can forge a path forward.

Finally, we'll zoom out to assess the big picture, how various categories of company may be impacted long term, how this crisis compares to 2008 and what that means for early stage founders, and the industries and business models that are now prime for growth. We begin by describing a typical growth model and discuss how that fundamentally drives a company's business strategy. The first voice to hear is Brian's, followed by Andrew. When we think about a growth model, the question is, how does one cohort of users lead to a company? another cohort of users. And how are you answering that question in a way that describes not only how you acquire our users, but the actions that they take in your product, what those actions generate, and how you reinvest whatever that output is back into generating more new and returning users. So within this model, you have hypotheses around who, the what, and the why.

Who are doing these actions? What are the actions that they are doing and why they are doing them? These are all fundamental hypotheses, whether you have it written down or not. I think like a very, very simple, simple shortcut version of this might be something like I find Yelp because I search for like best dumplings in San Francisco and then a Yelp page comes up. I'm excited about Yelp at some point, some percentage of those users end up actually then leading reviews. And then those reviews get indexed by Google and then they end up in Google's listings

and then more people find it. And so that's kind of how one group of users might indirectly. then lead to another group of users. Versus something like LinkedIn, which is focused on getting people to invite their colleagues and people that they're reading through professional networking, and it's very focused around getting you to send invites. And that's a very different type of a loop.

It turns out that there's like many, many, many flavors of this. This is kind of like the verbal version. When you go deeper, you're actually able to translate this set of hypotheses and ideas into spreadsheets and numerical models for what's actually happening in the business and understand the flows. Right. You're operating against this hypothesis, right? That hypothesis gets stronger over time as you run experiments, you validate them, you see the

data and that data kind of feeds the quantitative version of this. In this environment, a lot of those hypotheses are thrown out the window and what we validated in the past might have changed. As a result, you might have tailwinds or headwinds, right? The quantitative variables behind these things either get stronger or they get worse. but the only way that you actually get a decent picture of that is by going through each one of these individual steps and asking those questions. Once you do drill down into a spreadsheet,

what kind of data are you tracking? What are those metrics? Like if you're a travel company right now, I think you're seeing very specific metrics dropping, right? If you start kind of at the end of the funnel, what you're saying is, okay, number one, there's going to be fewer people actually like booking and converting. Like if you're Expedia or booking,

regardless of whether or not people are looking at flights, my guess is the percentage of people who actually look up the flight versus actually book the flight, like that conversion rate is probably down. You probably have folks that end up doing more research because they're not quite sure like when to fly or they feel like, well, I have to check the State Department website to see where I can actually go. And then all the way to the demand question of, you know, how many people are in that activity versus I would guess that if you're inside of, you know, one of these collaboration tools,

what's going to happen is all of a sudden every user is going to be sending more invites to other users because we're all living in Zoom right now. And so as a result of that, all of those metrics go up. And so what ends up happening is if you think about the verbal version of the growth model as a series of events that chain together, then what you start to realize is, wow, like there are going to be certain steps that are going to go way, way up that are then going to sort of cause the entire growth model to like really radically amplify. Or there's going to be ones that dramatically temp things down. And if step one or two of the growth model start hitting a lot of friction. Then, of course, it's just going to get harder and harder because each

group of users is going to produce fewer and fewer users. If you think about it from an acquisition standpoint, the same thing for engagement as well. There's a couple things about this, though. One is that I've seen a ton of categorical data out there. People saying, this is what's happening to B2B SaaS or this is what's happening to this category. And I think for specifically founders who are probably listening to this, the category data is interesting, but it's actually not that helpful. Everybody sits on a spectrum of people who are experiencing extreme headwinds, class pass, for example, who's probably seen, what, 90% of their business disappear overnight. And there's people who are seeing extreme tailwinds. If you're sitting on one of those

spectrums, your job is easier. The data is clear. It's immediate of what is happening and what the net result is. But the founders who are in the middle of the spectrum have the hard job. You actually have to look at each one of these individual steps to understand what might be changing and what might be happening to build specific hypotheses of how your company should act and respond. Most companies will need to go back to basics and reassess their businesses from the bottom up. If you are a travel company or an in-person fitness company, how do you go about completely revamping and reevaluating your growth model? How can founders be proactive rather than reactive? I know it's like an old Silicon Valley message of talk to your customer.

But honestly, this is one of those times where, like, you need to be talking to them at least a couple customers a couple times a day, founders, CEOs, the leaders of the team. Because the only way that you're really going to be proactive is going to get a sense for what is going on in your customer's lives and how things are changing and what questions they're asking and how their behaviors are changing. And by the time that comes through the data, it's just going to probably be too late. And so if you want to be proactive, you'd have to go back and rely on a little bit of basically founder intuition. In the way that you build that founder intuition is just by having lots and lots of conversations very close to it. I think a really big thing strategically that's changing right now

is there's a whole discussion for what should even be the output goal at the moment. I think this is where the growth model overlays with some of the financials for the company as well, where we've had several years where it's all been about top-length growth. And you have a lot of companies that are looking for 2x, 3x, 5x, year-over-year growth. And then the growth model ends up needing to support that. But I think, you know, the whole industry is saying, okay, well, maybe actually top-line growth of that type of several hundred percentage points in Italy is actually not the focus, because everything's so uncertain. We have to watch our cash. So then what I've seen in the conversations I've been in is then your growth models are actually as much about how do you grow efficiently from a cash

standpoint. And so if your whole thing is about, okay, we need five X growth, then that means that people need to invite each other at a certain rate. And if they're not, then maybe you need to make that up with paid marketing spend, with financial incentives for your users to use the product, whether that's in the form of free subscriptions or in the form of a lower price point or if you're a marketplace company, you might give people discounts that are dropped into all the consumers' accounts. A lot of what Brian and I've been talking about is oriented around product-driven growth, where you're getting these users for free because they're engaging what you're doing. You're potentially evolving your product over time such that you're able

to tap into higher engagement. That's an interesting point that this may lead to a broader shift toward product-driven growth as opposed to some of these previous strategies that we relied on. That shift has been happening for a while, and I think it's just probably accelerates it. And so we've seen the product-led growth motion in certainly in the B2B space happening slowly. And we've certainly seen a lot of companies that don't have that motion now like, hey, like, should we develop a free use case for this product? Right. And so we know that that mental shift is happening.

I also think it probably accelerates a ton of mistakes in this area, right? How so? Well, because companies that don't previously have like a free use case of their product typically think that they can get to a free use case by just taking their existing product and removing a couple things and turning it free. And that's not how it happens. You build very intentionally for a product-led motion of how you build that first user experience in activation

and how it spreads within the organizations, how you detect the signals that they're ready to upgrade. All of those things just don't happen overnight or by just removing a couple features of your product and reducing the price. So I think those are maybe two distinct things. One is readjusting the output metrics, the expectations that you have for how you're going to grow, and the second is how do you evolve your growth model to tap into the kind of engagement that's

working with them. I'll give a quick example, lunch club. The previous model was each week, they would set you up in a professional networking context with someone else in the industry and they would sort of, you know, look at your profile and what your goals are and kind of match you that somebody really interesting. They give you a time slot and then you meet for poppy. Well, all of a sudden, you can't do that anymore, right? But what you can do is you can shift all of those meetings from in real life coffee meetings

to virtual, which is exactly what they've done. You've now completely pivoted your growth model from something that encourages real-life interaction to something that's virtual, which you can do many more of, and in many ways, you're going to be maybe less flaky, you're going to have better experiences, which is exactly what they've seen. And by tapping into that, you actually can get much better growth. I think one of the challenges is that consumer behaviors are so unpredictable right now. You can have a hypothesis about how changing that model is going to impact the bottom line.

but for many businesses, perhaps you're flying blind until you see if it works or if it doesn't. To the point about unpredictability, if you're facing headwinds or you're facing some kind of friction around people converting or people paying, this is the time to basically what I would say, like fill the lakes and like dam up the lakes. Christopher O'Donnell, who's now the chief product officer at HubSpot, developed this analogy where as we talked about our growth model, he used to describe, there's parts of the user journey that are lakes and parts of the journey that are rivers. He's kind of talking about loops and funnels. What he means is there's parts of the user journey where the user gets in there, they engage, they're kind of like hanging out for a while. And at some point, there's like a part in that journey or they're showing some level

of intent that they're ready to move to the next stage. And so you put them through a conversion funnel, let's say, like a sign up and then they get into another lake. And people just aren't in the mindset to like convert in your seeing headwinds, then the best thing you can do is build up the stored potential that you might be able to convert later. And that's really where to start to invest. Some examples of this that you see a lot of companies doing is like Loom. So Loom is kind of this asynchronous video messaging products. So rather than writing a long email, I can just quickly report a video and send it to somebody. So they completely opened up their limitations on their free plan and reduced their paid plan by 50%.

So what are they doing here in the context of their growth model? Well, the core part of their growth model is this loop where somebody records a video. They share that video with somebody, somebody sees that video, signs up for Loom, and then they start recording videos on Loom as well. So what they've done is they've basically removed all the friction possible from that loop by opening up their free plan and just allowing that loop to like spin as much as possible filling up the lake. And at some point, this pool of people will have probably more intent to convert for more ability to pay for the product. And so what they're really doing is they're building up

stored monetization potential. There's a number of companies that have taken moves to do this, even Peloton did this by, I think it's like 90 days free on their product. And so you see companies both headwinds and tailwinds doing that. And that's because this has been an injection of weird customer behavior. And so the question is, how do you respond to that customer behavior? You can either ride the tailwinds or fight the headwinds by filling your lakes and storing that monetization potential for a later date. Why Loom and Zoom and Clubhouse and some of the other new social experiences benefit is that basically you can use the current boom in engagement and viral growth to build out your network. And then what ends up happening is you get this density, you get all

these network effects, you get increased engagement, et cetera. And that sort of is this really interesting zero to one period of being able to launch into potentially a much bigger network that even when everything goes back to normal, you sort of can perpetuate this network that you've already built up during this time. There's kind of a question here for the super early stage startups. Those that are experiencing tailwinds is the tailwind, the end, or is it the means to an end? What I mean by that is, let's say I'm an ed tech startup that's focused on some kind of product for homeschooling, probably seeing a really big search right now because parents are just like, what the hell do I do with my kids? They're probably seeing a massive

search. That's probably going to give them a huge injection of fuel right away, but what's permanent, what's not permanent? And so for companies and situations like that, I'd be thinking about, okay, well, how do I use this time as like a means to and meaning if I don't believe that this behavior change is permanent? How do I like use this as? a jumping off point, but at some point I'm going to have to transition them to some use case or change their mindset of how they view this product to something that's more permanent and more long term. So how do I use this as an acceleration fuel? But that transition is going to be really key. And those that view this as an end, they're just going to experience massive churn at some

point. And so planning against that and using this as the launching platform, I think is a big question for startups. I'd like to shift and talk about growth in a downturn. It's kind of the elephant in the room. The very concept of growth can seem aspirational to some at the moment. Many are having cutbacks and cash flow issues. How do you balance necessary cutbacks with growth? I think the very simplest things to do tend to be like, okay, we had a growth model where paid marketing was part of the input. And it turns out that we need to go reevaluate all of it because it no longer converts whatever CAQ-LDB assumptions that we had potentially no longer. In a lot of cases, the companies they're facing headwinds, things like that are the first things

that get cut. And that's the easy evolution of taking some of the channels that potentially no longer work or some components of the growth model that no longer work and just cutting them and saying, look, if it turns out that this period is longer than six months, it's better to get rid of this and then we can rebuild the function later, whether that's from an expertise or infrastructure perspective. And that's a little bit more evolutionary. I want to empathize with the other founders out there, which is like, I don't think you ever truly know 100% right now if you're cutting enough versus too much. You never know.

And so like this is a really hard thing where you're essentially taking bets on certain things when you frame it as here's what we're taking a bet on. I think the conversation changes because you can start to talk about confidence of these bets and different actions. But I think a lot of the things that you should probably be cutting if you're trying to be really conservative or a lot of this super special. functions and retaining the people that help you adapt and move quickly, the more versatile people internally. But if you're starting to cut into the people that allow you to adapt and move,

you're probably only doing that if you're in a super cash-constrained position and you 100% have to. How should companies think about growth if they're cash constrained? You end up needing to decide what is considered a specialization, what's considered optional versus what's the core of the business. And I think that can be refocusing strategy discussion for the whole company. I've now had multiple conversations with the founders where they do a cut and the team is, needs to make tougher decisions, more focused decisions and actually everyone feels really good as a result. Your leaders in the company, your high performers, you know, they're going to know if your growth model is not working, all your dashboards are going haywire and you're not making

the hard decisions. That's a red flag for a lot of people on the team. Being early to recognize that and confronting that and making the right decisions, I think, will garner respect for everyone around you, even though it's obviously an enormously, enormously tough decision that we would rather not make. Part of that, too, is just writing down, what are the things you're taking bets on so that in 30 days, you can continually go back to that and be like, okay, we made these choices because do we have any data that points in the direction? Are we right or wrong about these things? At least at Reforge, a lot of our revenue comes from company EDU budgets, the education budget. And so we went on a big research project to try to understand what was happening with those EDU budgets across different segments of our customers.

We opened up all of that data to our team. We said, here's what we think and how we interpret the data. Here's what we're going to take the bets on and here's the resulting things. And we're going to check back in on this in 30 days. And so we enumerated that very clearly to the team. I think you need to make it super clear to the company the operational changes that you're making. You typically have to have a more directive leadership style versus curating things from like bottoms up in order to move quickly. But if you change to that style and you don't actually tell the team, hey, we are changing to this style because so they understand that, hey, this probably isn't a permanent way of operating, but it's necessary.

and at some point we'll go back to kind of some of these other methods. So in good times, many startups take this iterative approach. So they run various experiments and they pursue product market fit. I've heard a bit from both of you on one hand saying you really have to cut that out right now and buckle down in your core strategy or that you need to shift and continue to run these experiments and be a little reactive and maybe a little quicker to change than you might under ordinary circumstances. How do you think about experiments at a time like this when we're in a lot of economic uncertainty? It depends on what type of experiment we're talking about.

So if we're talking about an experiment in the context of like, I'm actually running like some type of A, B, multivariate test to try to get statistical significance and stuff like that, I would be throwing them out the window because the data is just completely messed at this point. And whatever results you're getting isn't going to be a core learning that is predictive of the future. And so any of those types of experiments, you'd have to be thinking about running them in parts of the product where you have really high volume that you're going to get results very quickly. First is those that are going to take weeks to get data and start to influence a core product change that might last for like months or years. Those are probably bad

experiments to be running right now because you're going to be acting on either bad data or bad learnings or on a time window that doesn't really matter. But if we're talking about experiments in the sense of I'm trying things and I'm trying to gauge the reaction either qualitatively or anecdotally. Those are kind of like a different set of experiments. What you're really looking for is an obvious reaction that something is working or not working versus statistically significant data. And I think the question there is how much of your team's time should be spent on things that are reactive to the current environment versus trying to invest resources that feed the it in the long term.

A-B tests and experiments, it's like a context-dependent tool. And the question comes down to A-B-Tests are often the most useful for refining something. They're often very, very good for optimization problems. And so if you already know exactly the thing that you want, a specific output, you want an invite screen to produce a certain thing. You want a payment screen to have a certain conversion rate. A-B-tests are amazing at that. What A.B. Tests are not very good at are, well, you know, our product no longer works anymore.

And we've lost product market fit. And who knows if it'll ever return back. And at that point, I think then you're basically back to a zero to one product market fit search. You're almost coming up with a new product. And hopefully you can reuse a bunch of what you've previously built. But I think in many cases, there's a bunch of companies out there in some of the headwind categories that need to be thinking about pivoting their core product idea. What is your advice to founders? Do you plan to endure or do you plan to adapt? I think for most founders, they're probably first erring on the conservative side of things of shifting back to the endure end of the spectrum and we'll then shift into an adapt plan at a quicker rate. That's what I see most founders doing. But I also see founders who are in

amazing cash position, even though they're not experiencing massive tailwinds, doing very aggressive things. Guillaume Cabain, who is the former VP of Growth at Segment and Drift, came up with this with a lot of his companies, where for those in the cash position, they've actually been creating a list of all the companies using their competitors, going to them and offering them to switch to their product for free for a year. It's a very aggressive move that some people might have the option to take, even though they're not experiencing very obvious tailwinds in this environment. The question is, if you're in that middle part of the spectrum, what choice do you want to take a bet on? I think ultimately, the act of entrepreneurship is really rooted in

optimism. I think ultimately, the entrepreneurs out there are going to try completely new things. They're basically going to start new companies. Using the resources, using the employees that we have, and I'm sure we're going to see a ton of success cases there, we're going to see bunch of folks that singularly held to a vision and cut the cost that they needed to and they'll see the other side of this. And I think ultimately both strategies can work. I'd like to look ahead to the future for those founders who are attempting to scenario plan. Where should a founder begin when they're trying to map out a path forward? I think as a founder in these really, really uncertain times, you end up needing to be able to keep two complete extremes in your

head at the same time. In one extreme, you basically have to say the whole ecosystem is going to fall apart. We're not going to book any revenue for the next 12 months. And then when things come back, it's only going to come back at 50%. And then after year three, then maybe it'll come back a little bit more and just being really, really conservative about that and being like, okay, we have to plan around like the wheels completely coming off and just complete disaster scenario. And you have to have that in your brain, which is terrifying. Because it's, it's, it's, It's basically like many, many, many multiples of anything that you would ever typically plan. And that's why we have companies that are basically going into hibernation and, you know,

thinking about waiting all this out. And that's kind of one end of the spectrum. In the same way, you also have to have enough resourcing and optimism and leadership and vision to think, no, we're going to get out of this. And this is why this is going to be a huge business in 2021 or 2022 on the other side of this. I think you need to keep both of those extremes in mind because if you, you know, if you only have one, if you only go the conservative route, then what you're telling the team and what you're telling your investors is, we're not going to do anything for the rest of this year. And you don't want that. That's not an exciting vision for your top people to work in. Then they'll go somewhere like B2B collaboration tools or

they're going to games with Instagram really fast or groceries, et cetera. On the other hand, if you're overly optimistic, you're creating existential risk where if things don't come back on the timeframe that you're predicting, then all of a sudden you're gambling the entire fate of your company on that as well. In a lot of the startup conversations I've been having, if you lean too far that way, it doesn't resonate with people. Because if something feels like it's just overly promising, no one's going to believe it. It's not a great look from a leadership standpoint. Keeping both of those in your head, very, very hard, but I think you have to be able to do it. Our monkey brains are not designed to balance those things. Like, at the same

time, we have not good for that. At least what we've done at Reforge is we've, we'll look looked at our scenarios on a wider range of outcomes than we would typically consider. So everything from a 20% cut in demand down until an 80% cut in demand over a wider range of time periods, and it's less likely that those extremes happen, but are more likely than in typical situations. And so that's why you have to account for those. And then as a company, you need to decide where on that spectrum of those wide outcomes that you really want to sit. And this really depends on where your cash position is, where your status of your investors is at, how easy it is to, like, go out and generate more cash if one of the extremes happens?

I think we would all love to believe that this is this temporary thing, the context there is, that it is very likely that there will be a cascade such that we're actually at the very, very, very beginning of a 20 to 30 month market downturn. That feels very plausible to me, that that's what's going to happen. And so if you start thinking about things in that time frame, 20 to 30 months, that means that every startup has to think about this as not only potentially impacting their next fundraise. I mean, it used to be like our entire startup ecosystem was all about you raise money for the next

18 months because you know that there's another round down path. And so now all of a sudden, if you're thinking 20 to 30 months, then well, the next round might be really hard to do, but also the next round might be really hard to do. And so then the discussion becomes, as an ecosystem, what becomes attractive in this kind of environment. Various categories of company are obviously feeling the impact in different ways and on different timelines. How do your planning scenarios differ for different types of businesses? One of the educational and illuminating things that we've seen over the last couple weeks has been, there are very clear industries and product categories that are benefiting from everybody.

sheltering in place, and then there are clear ones that are not. If you're in entertainment, you're in games, you're doing something in video, you're doing something in workplace collaboration. All of those have obviously benefited. You're seeing across the board higher conversion rates, more time in the apps. And then as a result, more acquisition. It's half the price right now to acquire a user for one of these entertainment products. Pretty much any product that's subscription and has really high retention on the subscription side is going to be an interesting the state because you can maybe acquire a lot of these customers for cheaper, through paid marketing, through mortgagement. And then if you're able to then retain a really high degree

of renewal after this, then those users you'll probably keep forever. So I'm not surprised if you're Netflix and Spotify, but also like YouTube subscription product and like even Fortnite's battle passes to stand to benefit because they can continue to retain these folks over the course of multiple years. The question then becomes, how do they persist the advantage that they're getting into the future and what types of companies actually are able to get that. And I think I would point to a couple things. Number one, growth models that are just extremely efficient and don't require a lot of dollars in in order to create growth. A really good example that we've seen is that there are a ton of companies that are sort of building on Zoom as a platform

now. There's much of Zoom dating apps. There's run the world, the conference product that also has integrated video. And so you looked at a lot of products like that and you'd say, okay, wow, like those could grow really efficiently, they could take advantage of the current time. I mean, how do you think that these broader societal shifts are impacting growth? Children, place, work from home, is that going to have a long-term impact on how companies are going to need to think about growth? It is a really, really big assumption. Even 12 months from now that things are going to go back to normal. Maybe a bunch of consumer behaviors are actually going to fundamentally change as a result of this.

For example, products that are now that everyone's used to working from home, that all of a sudden a bunch of products that were oriented ground that will gain and a bunch of products that are oriented ground in real life workplace settings will be less attractive. And that impact may span multiple years. So if you start thinking about it that way, then you may have to fundamentally evolve the value proposition of your product in a different direction. In the lunch club case, you know, that's one example where I don't know that that company is going to want to go back to in real life meetings after this. because it just turns out that maybe that's better, right? Similarly, virtual kitchen company operates a network of dark kitchens and what we do is to sign up local restaurant brands. And all of a sudden, it's like, well, actually,

once these restaurant brands start doing delivery and they see the value proposition is really, really strong, then do they go back to saying, actually, no delivery, we just want to do our brick and mortar thing? Maybe not. I think that there are huge opportunities that potentially we're kind of pulling forward a lot of behaviors that we're going to happen anyway,

but we're just pulling them ahead five years or something like that. And then I think there's going to be things where it'll happen this way, but it'll be in the negative as well. I go back and forth on this. I go back and forth on how permanent some of these behavior changes are and how strong our just basic human motivations and needs are and how that can just pull us back to the norm. I do think it's probably accelerated our comfortableness with doing some things online.

I think just people who have been sitting in offices for 20 years or their entire career, like, I could never do remote work because they've never done it, right? But when you're forced into certain situations and actually do those things, a lot of times you realize, oh, okay, like, this isn't actually as bad as I thought it would be. In terms of the growth function, I think that a lot of what Brian and I've worked on over the years has been this emergence of all of these growth teams inside of the top tech companies. And a lot of the reason, foundationally, why this occurred was because a lot of the kind of traditional, quote-unquote, brand marketing tactics, starting back in the 90s, right, of like buying TV time, TV commercials and doing events didn't seem appropriate for the new generation of consumer companies. And so, and instead, you know, it ended up being kind of this interdisciplinary teams inside of these companies that try to solve these tricky problems around how do you get your product to kind of grow itself.

I do think that what we will for sure see in these types of market downturns is there's almost always a big advertising pullback. I mean, we certainly see that if you're part of the travel industry, those folks are cutting their marketing budgets in a big way. And then if you look at the earnings guidance from the Googles and other folks, they're saying, hey, you know, the next couple quarters may be rough as far as advertising goes. And so if you have that and you're basically like, okay, well, you can no longer grow through advertising, what do you do next?

I do think that there will be a retrenchment into the idea of you have to build the best product. You have to take advantage of the consumer behaviors that are emerging. What do you see is the differences between 08,09, and now? And do you think those differences are beneficial to founders? I think the most important point is globally, the number of people coming under the Internet isn't growing at such a fast rate. Mobile isn't going on a fast rate. We don't have as open platforms as we used to have.

All of these major tailwinds that definitely projected or like fueled out of the 08-09 isn't there. I do think that is a massive difference. I think there are two things that are different from the last era. One is recall the iPhone platform, the Facebook platform, those things all got created 2007, 2008. It's sort of very much aligned with some really big technology-driven shifts. I think you could argue now audio is very, very interesting for all the Alexa devices. all the AirPods, video is very, very interesting, games is very interesting. We'll see what happens with Google Stadia and XCloud, but then also, you know, Steam and

you know, so on. There's a lot that's happening around building really compelling consumery experiences in the enterprise. That's very interesting. So I do think that there's a couple of these, but it's not as obvious as like the Apple iPhone. The second thing that I think is really different 2008, 2009 compared to now is that taking a job at one of the big tech companies is now way, way, way more. compelling now than before. Just how competitive the comp packages are, the fact that a bunch of these

companies are actually working on interesting things. In comparison, you know, if you were in 2008, you know, it's like, oh, yeah, do I work for Google or not Google? But now you're in a world where you're like, oh, maybe I should work for Pinterest and Airbnb and Slack and like these companies are all working on really, really cool things. And so I think that will cause new entrepreneurs to maybe second guess where they want to be. On the other hand, also, there's no time in history that it's been easier to get your first million bucks in funding. And I love the idea that as an ecosystem, we've decided that like, look, if you're legit, you want to start a company. There's a community of people willing to take a bet on that. And so I think that's the other. So I think some things have

gotten easier, some things have gotten harder. But I still remain optimistic that over the next few years that some of the best companies that we'll see in this generation will be created. As a founder, I appreciate the optimistic view. So once again, flip them back and forth between the two sides of the monkey brain. when I was coming out of college, people were talking about, like, is it going to be possible to ever make money on the internet? Was like a real question that smart people were asking, right? And we saw the same pattern repeated 2008, 2009, you know, the companies that came in the years right after that ended up being really compelling companies. And I think the same thing will

happen here, if you can make it to the other side. Yes, it's being able to lean into that agility to shift strategies quickly and adapt. Some of the key things that we talked about today, like collaboration tools and entertainment and social products, you know, all of a sudden, like all those sound really, really good. We've spent most of this conversation talking about existing entrepreneurs, like you already have something and you're trying to figure out what to do with it. I think there's a whole other very, very interesting question that's like over the next year, you're going to have a bunch of entrepreneurs that are going to start companies from scratch and what are they going to pick? The things I think that they're going to

pick are going to be very, very different as well. I'm certainly very excited and very bullish about all the tools that we're going to have for working from home or entertaining ourselves or feeling that social connection even if we're not there in person, how that's going to get supercharged, I think, over the next two years. We're going to have the entire generation of entrepreneurs tackling these problems. Thank you for joining us on the A16C podcast. Thanks for having me. That's great. Thanks, Brian.