Invest Like the Best with Patrick O'Shaughnessy - Mike Maples, Jr. - A Playbook for Startups - [Founder’s Field Guide, EP. 48]

Episode Date: August 26, 2021

My guest today is Mike Maples, co-founder and partner of Floodgate. As a child of the computer revolution, Mike was deconstructing calculators in grade school, writing video games in high school, and inevitably found himself building businesses in Silicon Valley after college. After his success as an operator, Mike eventually transitioned to become a full-time venture investor in the 2000s, and has since built a track record that includes Twitter, Twitch, Lyft, Octa, and a long list of successful tech businesses.   I'm not sure I've recorded a conversation with more applicable ideas and advice for company builders. We discussed early insights and secrets, value hypothesis testing, customer development, growth, team orchestration, and a lot more.   This is a masterclass from somebody who has seen it all. Also, do not miss his answer to the kindest thing question at the end of the conversation. I hope you enjoy this great talk with Mike Maples.   For the full show notes, transcript, and links to mentioned content, check out the episode page here. -----   Founder's Field Guide is a property of Colossus, Inc. For more episodes of Founder's Field Guide, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @patrick_oshag | @JoinColossus   Show Notes [00:03:08] - [First question] - His philosophy on the power of forcing a choice [00:04:43] - How he knows when he comes across a team that has an apple quality [00:07:39] - Exploring and hunting new inflections in ever-changing systems [00:10:37] - Why recognizing winning insights allows you to not have to predict the future [00:12:23] - Whether or not the evolving nature of the funding landscape changes his thinking [00:14:18] - An example of his insight framework and stress testing a team’s potential [00:17:21] - Practice reckless optimism [00:18:54] - Commonalities between teams and their ideas when they get inflections wrong  [00:20:12] - What the value hypothesis is and how to test it [00:22:15] - Ways that effective startup teams operate compared to big corporations  [00:25:36] - His involvement post-investment and where outsiders can be most helpful in a companies’ early days [00:28:34] - Lessons learned about finding, convincing, and marketing to their first customers  [00:32:13] - An example of early customer selection done phenomenally well [00:34:09] - Why it was possible for companies like Justin.TV and Lift to pivot so dramatically from their original ideas  [00:38:49] - Customer development and using good customers to your advantage [00:42:31] - Who went from founder to the best growth executive  [00:43:05] - What he thinks his firm will need to do to continue offering an apple to founders [00:46:08] - The most useful stress tests his firm can offer founders [00:46:52] - Defining category design and what the process of category design looks like [00:50:33] - Inflections he’s currently paying the most attention to [00:52:07] - His experience with an HP35 calculator and how it shaped his life  [00:54:41] - What venture capital may look like in the future [00:56:30] - The most difficult things he faces in his career [00:57:52] - Ways he’s learned to manage failure more effectively [00:59:06] - The kindest thing that anyone has ever done for him  

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Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Founders Field Guide. Founders Field Guide is a series of conversations with founders, CEOs, and operators building great businesses. I believe we are all builders in our own way, and this series is dedicated to stories and lessons from builders of all types. Founders Field Guide is part of the Colossus family of podcasts, and you can access all of our podcasts, including edited transcripts, show notes, and resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management, all opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaunsi Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Ascent Management may maintain

positions and the securities discussed in this podcast. My guest today is Mike Maples, co-founder and partner of Floodgate. As a child of the computer revolution, Mike was deconstructing calculators in grade school, writing video games in high school, and inevitably found himself building businesses in Silicon Valley after college. After his success as an operator, Mike eventually transitioned to become a full-time venture investor in the 2000s and has since built a track record that includes Twitter, Twitch, Lyft, Octa, and a long list of successful tech businesses. I'm not sure I've recorded the conversation with more applicable ideas and advice for company builders. We discuss early insights and secrets, value hypothesis testing, customer development, growth, team orchestration,

and a lot more. This is a master class from somebody who has seen it all. Also, do not miss his answer to the kindest thing question at the end of the conversation. I hope you enjoyed this great talk with Mike Maples. So, Mike, I've been really looking forward to this one since our first conversation. I like to dive right in. We'll get to your fascinating history and all the things you've done, but I like to start with ideas. One of the ideas that really struck me when we talked last was this notion of forcing a choice and the power of forcing a choice in business.

Can you explain in detail what you mean by this and why it's so powerful? I like to say that there's two fundamental fields. of business that are animating the economy, right? They're scalable corporations and then they're scalable startups. And a scalable startup only has one opportunity to succeed. And that is if they offer a choice in the direction towards a different future. So people don't want something incrementally better from a startup because human beings are conditioned to like things. And if you're too much like what they already know, there's not room in their head to believe that you can incredibly do a better job than a very large incumbent as a startup. So what a startup needs to do

is offer a choice of a different future. So if everybody in the world is selling bananas, you don't come in and say, I'm 10 times better banana. You say, I'm the world's first apple. You may not want my apple. That's okay, but you can't reconcile an apple and banana. The set of people who value the advantage of apples, 100% of them should flock to your apple. To me, a startup that creates a breakthrough has to force that choice because they're trying to create a movement. They're trying to move people to a different future of their design. People don't move because of a comparison. They move because they see something radically different, not incrementally better. How do you decide what might be an apple? I mean, it's obvious when you use the fruits as examples versus like a much tastier,

more ripe banana or something like that. But how do you know you've done this a lot? You've got a million reps when you find a team or something really early that might have that Apple quality? So I'd say that there's really two markers. At a high level, the markers are inflections, which lead to break through secrets about the future. And then there's teams that assemble in a collaborative structure that's different from a typical corporate organization. If we take the first part, inflections, an inflection is a seed change that creates. the opportunity to create a breakthrough that changes the subject of the future and changes the way we, the people think and act. What are some examples of inflections? Lift, a company we invested

in, GPS locators got bundled in with smartphones. And so another inflection was that smartphone adoption, we believed, was going to go from 10% to greater than 50%. And so you say, if you marry those inflections, you could envision a world where in the near future, lots of would have smartphones that can find each other. And so then you could imagine applying the ideas of Airbnb and the sharing economy to cars. To me, that's the first step. And this is the step that a lot of people skip. I call it insight development. So in insight development, you use a technique we call backcasting to identify a secret that will lead to a different future, that will be a breakthrough different future. And then after that, you iterate that insight to product market fit.

using techniques like customer development and others. And then after that, you do growth hack. So there's this breakthrough sequence. There's the insight breakthrough, the product breakthrough, then the growth breakthrough. And so you need a team that's able to do that because a secret about the future, it reminds me the movie Ocean's 11.

It's not enough that you just know that there's money in the Belagio safe. You have to rob it. These breakthrough movements, you have to have the courage to be disliked. You're making people uncomfortable. You're getting people out of their comfort zones. You're telling people the way you think of the world now is about to be replaced by a radically different way of thinking about the world.

And so as a result, the reason I like the Metaphor of Ocean's 11 is you've got the guy that can pick the safe and you've got the acrobat. You have the person that cuts the lights in Vegas. You have the person that drives the SWAT van. You have George Clooney kind of masterminding it all. Startup teams are a lot more like that. The great startup teams are engaging. an optimistic conspiracy theory to change the future. And so they need people that are different from a traditional org chart. They need people that are going to take out the critical risks

that exist between them right now and that different future that they want to design. You've used so many terms there. I'll kind of start at the beginning. So starting with inflections, in the examples you gave, there was all kind of cases of new rules, new system settings, if you will, and whether that be regulatory or enabling technologies or some part of the playing field that has shifted permanently or recently that unlocks these new sort of businesses or business models, how do you hunt for those? Like, how do you make sure as someone that invest in companies that rely on those changes to the playing field that you're aware of all the ones happening? There's a lot of insight to your question to unpack. So the first thing I like to say is,

if you want to have a great startup idea, don't think of a startup. And the reason is that if you think of a startup, you're going to orient yourself in the present. You're going to look for gaps in today's markets. You're going to look for pain with today's customers. So what I like to say is that what you want to do is time travel. If customer development is get out of the building, insight development is get out of the present. And the way you get out of the present, your secret weapon is these inflections. inflections that are powerful can displace the advantage of any incumbent approach. Let's take digital cameras, for example. When I graduated business school, it was $850 for 0.3 megapixels and like 8-bit color.

Kodak wasn't waking in its boots, but when Facebook bought Instagram, Instagram had less than 15 people, and Kodak went bankrupt that same year. Well, what happened was, in this case, Moore's Law, the amount of megapixels per dollar and the depth per pixel just kept exponentially improving to a point where now all of a sudden it was better than good enough as a displacement substitute for cameras that use Kodak film. And so when that point in time happens, Kodak has a real problem because you can't reconcile buying film for a camera with just taking snapshots on your smartphone. So like that would be a great example of an inflection would be the amount of fidelity in a photo per dollar with digital cameras. Moore's Law has been doing this with microprocessors, but you could also look at the cost to sequence a genome, the cost to get an accurate AI prediction, or the cost to accurately train an AI model to visualize something or recognize something visually. So all of these things are like the asymmetric weapon that allows the entrepreneur to wage asymmetric warfare on the present. It's like when you're surfing in the ocean, you need a wave.

And it's like the power of the gathering forces of the ocean come beneath you and your surfboard. So obviously you have to control the board. But the wave is a precondition of surfing well. So we say to founders, rather than trying to think of a startup, what we should do is try to identify the impact. reflections that are going to have the most profound impact on the near emerging future. To give us a sense, just to orient ourselves in what you're thinking about today, it sounds like what you're saying is Moore's Law is a great example. All of these inexorable tech trends are an example. But to extrapolate, let's say it was Moore's Law back then, not to view Moore's Law

today, but say, what will Moore's Law mean five years from now and three other trends? What will they be five years from now? And then let's build our idea in that future state. Is that a fair summary of this insight searching? I have the opportunity to not have to know where it's going to go. I just have to have the ability to recognize a valid insight and distinguish it from an insight that's not so valid. A lot of entrepreneurs when I say, okay, follow inflections to different futures and then build what's missing in that future and recruit early believers in that future. They say, well, that's obvious. And then I'll say, okay, well, let's come back to your idea. What are the inflections that are going to drive a radically different future. And a lot of times, they'll say,

let me get back to you on that. Or sometimes they'll say something like, are you saying that you don't think my business is going to be a breakthrough? And unfortunately, quite often I have to say, based on our discussion so far, that's what I'm saying. Entrepreneurs who are going to create breakthrough startups, they have to change the subject. And entrepreneurs are going to change the future. They don't have any resources. They just have these tiny teams in a little bit of cash. And so they have to have a force multiplier that's bigger than them. What I really like are founders who are following these inflections and beginning to get an intuition about different futures with unbounded upside. And then I have to bet on not just the quality of their secret or the quality

of their insight, I have to bet that the team has the talent and the wherewithal and the grit to make it real. When you're thinking about meeting a team for the first time and you're kind of going through this process of do they have an insight? Can they build out against it? How does the evolving nature of the funding landscape change or modify your strategy? So it used to be, these teams were incredibly constrained by the number of people they could hire

because they were constrained by capital. Now it's like every day I'm seeing a company with a PowerPoint raising five, six, seven, sometimes $10 million with seed-like dilution. How does that change your thinking? Does it? Does it amplify the way you do things? Does it make you change your strategy?

How do you evolve in that changing environment? Yeah, what I found so far is that a lot of people like to invest in some type of demonstrable progress of the company. They like to say that we've got customers. I can analyze a cohort. It's a market I understand. Surprisingly, I find when you invest in insights, you don't have as much competition as most people would think because you can't explain what the business will be. When we invested in Lyft, it started out as Zimride. And if you read their summary, it says we're transportation service network for colleges and corporations.

But then later on in that same one page summary, it says part of what we're leveraging is the opportunity to create like Airbnb for cars. Most investors are going to look at what the company does and evaluate the business for what it is. But 90% of our exit profits have come from pivots. And so what matters to us is the potential energy of the inside. and the potential market that it leads to, and not the actualized execution or the actualized market yet. And so what we try to do is, just like Buffett and Munger tried to understand the nature of scalable companies with their mental models, that's what we kind of geek out on at Floodgate,

is what are the mental models that help you identify what makes a great insight? You mentioned, I think you called this insight frameworks last time we talked about this concept and given that's where all your exit value come from. It's obviously where we need to dig in a little bit more. Give us an example or two of these early models. So we'll presume you're with a team or a founder that seems to have like some markers of potential insight, right? So you're interested for some reason. What does the process look like from there to investment?

Like how are you stress testing the potential that a team has alighted on what you would call an insight about the future? The first thing we look for is the inflections. What are the change events that are bigger than you that you're riding? And why are they powerful inflections? Are they little miniature mini-inflections? like Stripe just launched a new API call last week, or is it a C-change type of inflection? Like now, all of a sudden, with COVID, people believe telemedicine visits make sense as a mainstream thing to do. And so you say, okay, first of all, let's talk about the inflection

and why it's going to allow you to change the subject and why it's going to let you disorient incumbents and force a choice and not a comparison. The next thing that we do is a little bit controversial as well, we want to go after an unbounded upside opportunity based on that insight. And we actually want to lean into risk. So most people I know, if you said, I'll give you a choice between 80% chance of 5x or 20% chance of 50x, most people would pick the former because they think of risk as avoiding failure. But I like to think of risk as something you take. Taking risk means out there is an unbounded upside opportunity. The purpose of this seed round is to pursue it and decide whether we want to make an all-in bet on that insight.

Now, there's some advantages that most people don't realize that come from that. Most people are afraid to take that kind of risk. So as a result, you're learning things that other people aren't learning. And this is why pivots have been so profound for us, because your first product instantiation of the idea may be wrong. but the insight might still be right or the insight might just need to be tweaked 30 degrees. Well, now you have the advantage of, it's kind of like first mover advantage in a market, but you have a first mover advantage in the future. And so now you have an even more informed intuition about how to pursue that unbounded upside.

And so what often happens is that founders even underestimate their ability to impact the odds of the high-risk, high-unbounded upside opportunities. And I learned a lot of this from Beno Kostla. So Vinod likes to say failure doesn't matter, only success matters, as long as you're pursuing ideas where the magnitude of the upside is big enough. So if we take a risk and it doesn't go our way in the first year, that's okay. The entrepreneur still has their time back and we haven't invested a huge amount of money. But if we find a path to the unbounded upside based on taking that early risk, now we have a huge

advantage in terms of being able to execute towards where the real opportunity is in foreign by our prior experience in interacting with the market. And so that's kind of how we look at it. The sign over your left shoulder seems pertinent to this conversation. It says practice reckless optimism. I'm very curious about the reckless part of that phrase. It sounds like it dovetails with this point of risk being a thing you take. Say a little bit more about that.

Why is that sign there? That was given to me by a founder, Dom Zane, from around. He gave it to me for Christmas one time that a Christmas party immigrated from Easter, Europe to the U.S. And so we just kind of did friends. The thing that I think is counterintuitive to most people is that true breakthroughs just make people uncomfortable. They have an element of getting out of your comfort zone that you have to embrace.

Now, I don't want to just take wild, wacky swings at things with my eyes closed. So we try to inform the bets that we're making on the inflections and their power and the different potential futures that they could lead us to. And the inflections are kind of like the portal that allows an entrepreneur to time travel and to different futures and to get out of the present. There are different types of futures we could go into that. That's another way we evaluated is we like to say some secrets are plausible, some are possible, and some are preposterous.

All different types of insights, it matters what type it is because the type of team you need, the type of people you need to hire, the fundraising strategy, the risk profile, file, the amount of inflections that have to come together, all of those things vary, depending on the type of secret about the future that you're pursuing. When you've gotten inflections wrong, meaning the company is premised on some future state that's driven by one of these inflections, and it doesn't turn out to be the case, sort of like the fool's gold of inflections. Is there anything shared in common between those experiences, assuming you have gotten them

wrong in the past? I would say more often than not, we've made two mistakes when it comes to inflections. One is we meet an entrepreneur who has such a powerful articulation of inflections in the future that we overlook how good the team is. We just fall in love with the idea and the insight and just go all in. And then we realize, oh, no, this team doesn't have the stuff to bend the arc of the present to that different future. Because I like to say it's not enough, right?

There's two steps to it. There's finding the secret about the future. But then you have to move people to that different future, which is a different task, and it's a task that transcends just building product. I'd say that's the first mistake we've made is we were right about the insight, but we were wrong about the team. I'd say the reverse mistake we've made is the team just seems awesome, and we just can't look past the fact that they didn't articulate good inflections, and they can't articulate a radically different future, and they end up executing to a local maximum, and we have an okay but not great outcome.

You've got this great term, the value hypothesis, which I think is probably the next right topic in the sequence of a company's life. So you've got insight, day one, hopefully a really good team. I think the value hypothesis comes next. Can you explain what that concept is and everything you've learned about testing it or building it? Yeah, and I think that we have Steve Blank and Eric Reese largely to thank for some of this work. The value hypothesis is a simple question, which is what can we unique? weekly build that people are desperate for. If we can do that and we believe that people will be desperate for it at scale in the future, now we have an opportunity, right? So the insight breakthrough

breaks free from conventional ideas. The product breakthrough breaks free from the need to compete with anybody because people are saying, oh my God, where have you been all my life? I need this right now. I need this yesterday. And not only that, I need these other three features. Please build these features, please do this. You know when you've got this product breakthrough when you just feel like you're in a constant state of laying tracks in front of the train, but you're going in the right direction. People aren't arguing over features. People are like, how are you going to get these features done that we obviously need because our customers are desperate for this? And we just need to keep pace with their need to just pull product out of us. And so that's kind of like the

product breakthrough. The growth breakthrough, you're trying to break free from normal conventional ideas about how fast a company grows. You're trying to ask, what would it look like to achieve winner take all total global hegemony in this category of the future? And how can we rapidly penetrate it as quick as possible? So all three of those phases are different. The team changes, value creation changes. I like to say this breakthrough sequence, it's almost like you transition for being like a gas to a liquid to a solid. You are literally becoming something different when you from one phase to the next. And you have to change your mode of operation as a startup to account for that fact that you're transitioning from phase to phase. What can you observe recently

about the nature of teams in the maybe gas, maybe into the liquid phase of a company in those very early stages? And I want to keep coming back to this idea. I think it was the very first thing you said, which is like the difference between a startup and a corporation. We think about where value will sit in market cap terms 10 years from now. It seems like a really important question because those two things will drive most of the value. So let's double to click on that team portion. Like, what are ways that you see young companies operating that are most drastically different and effectively so

relative to, I'll call it, the big, staunchy corporations? I'd say that there's two fundamental things, and other than that, there's about a million details. One fundamental thing is you want to hire people to take out the most important risks as soon as possible. So a startup starts out. It starts out dead nest to prove it's alive. and it has a set of risks that stand between it and changing the future.

What we want to do is we want to take the very biggest risk and crush it first. Why is that? Well, if we fail to crush it, we're not going to succeed anyway. So we might as well know that this wasn't meant to be. But if we crush the risk, we've created the most profound possible value that we could in the time that we had. How do we take out risk? we hire people that can be aligned in our risk, take activity.

And some risk can vary. If you're a startup and you could get legislated out of business, you need somebody on your team or somebody in your orbit who's able to directly impact that risk and take that risk out. If the risk is, can we build it in the first place? Like with SpaceX, when they're launching rockets in outer space, you better have some really good Aero Astro Engineers, right? Like, that's not optional.

If you're building a social network where anybody can build it, the key risk is market risk and distribution. So how do you take those risks out as soon as you can? Contrast that with a corporation. You have an org chart. You have a functional org. You got a CEO, VP marketing, VP sales, finance, G&A, all this stuff. Okay, so that's one big contrasting factor.

The other contrasting factor is the way the teams operate. So I like to say that a corporation is like a marching band. They need dance steps and they need sheet music. Because otherwise, people don't know what swim lanes they're in and they don't know what their okayrs are. They don't know what they're supposed to do to create output in the company. A startup team's more like a jazz band in the French quarter. The lead goes on a riff and nobody knows when he's going to do it. Nobody sits there in the band and says, hey, that's not on my sheet music.

They don't even have sheet music in front of them most of the time. They just kind of go with it. And that tune will never be experienced that way ever again. It's a one-time singular event, but these people on these startup teams, they like that. They're the right kind of crazy. They like improvising together. And they don't think of themselves as a team in the traditional sense, as much as they think of themselves as part of a collaborative improv. You know, a team, you have to play your role and stay in your lane and sometimes subordinate some of your interests and creativity for the good of the group. But startup teams

normally aren't like that. They're like different types of musicians who like to jam together. and they just kind of go with the flow and they get into this state of startup flow as they build together and as they change the future together. Let's say post-investment now, but a very early stage for the company, what is your literal involvement? What do you like to do?

Where do you think you most bend the trajectory of a team or a business by virtue of what you and your team are actually doing? Is it conversations? Is it challenges? Where do you think outsiders of a business can be most helpful in those early formative days? The thing that we understand that maybe they appreciate is that a startup that's a breakthrough

literally is like a positive conspiracy theory to change the future. And so as a result, those founders don't need investors, they need co-conspirators. And they need people who believe the secret that they believe that's currently controversial. They need people who want to join them in a movement that they're about to create, they need people who understand that the future isn't something you predict. It doesn't happen to us like the weather of the future is what we decide to create. I would say that because that's our point of departure and working with founders, it's just a very different conversation than what was your cohort analysis last month. I think we understand that a startup starts out dead

and has to prove it's alive. And as a result, the type of help that those founders need is co-conspirators. What does co-conspirators look like when you're an investor? It means helping grease the skids to them creating this movement. And the ecosystem, it means helping them prioritize refining products such that they flow from their insights and their secrets, helping them realize the trap of thinking about total available market, of thinking about conventional requirement requests from conventional customers. If you're trying to build a breakthrough, you're trying to create all the elements of a minimum viable future, and you're trying to get all of the early movers to move with you to that

different future. And so you need to prioritize them and what's going to cause them to move and how does it flow from your insight for them to move. And one of my favorite examples is the first Tesla car, the first Tesla Roadster. There's no way it would survive a comparison in normal terms. He just borrowed a body from Lotus, threw some batteries in it. The fact that it worked at all was amazing. But people didn't buy the original Tesla Roadster because it was objectively a better car than, I don't know, BMW convertible. They bought it for aesthetic reasons. They bought it because it did enough to show minimum viable future. And early believers in that future were willing to part with their money to be the first to show they wanted to be part of that movement.

helping founders navigate that is pretty important because a lot of founders get a lot of advice, but a lot of the advice is conventional advice. It's not advice that accelerates your path to a breakthrough. It raises a really interesting question, which is when we can start to move into the actual field of customers here. You've got something, we'll just say it's at the roaster stage, minimum viable, cobbled together, whatever. What have you learned about finding, recruiting and convincing the best early customers. And better than that question is who to avoid? What are dangerous early customers to go after?

What have you learned about early marketing at these kinds of companies? Let's take the good and the bad. So the good is, and I used to do this as an entrepreneur, I called it going for the no. So we had software that would allow telcos and cable companies to roll out broadband. It's hard to imagine now, but there was a world where we didn't all have broadband. And so these companies needed to roll it out, and they were really bad at software. So I would meet with somebody in the operations at one of these companies, and I would start by saying, look, this may not be a good use of your time.

We sell software that helps cable companies roll out broadband. And if you don't need software like that, I just gave you 45 minutes of your time back. And I would start to make body language like I was moving to leave. And my goal was to have them pull me back, reach out and pull me back and say, no, I'm screwed. I've got to have three million subscribers in the next 18 months. My CEO just committed that on his last Wall Street call. I have no idea how we're going to do it because all my guys drive trucks and climb telephone poles or lay cables. And like, I'm screwed if I don't find a way to solve this. So like, I don't even care if your products have done. I got to have anything that

would potentially work. And in a scenario like that, a big incumbent company can't say, oh, it's on a roadmap. The customer, right, is desperate to get their problem solved. And they have no way to solve it. I called it back of the day going for the no. And I was like, look, I can't waste any ergs of energy on people who don't value my advantage. So there's either people who value my advantage or there aren't. And if there are, I need to find them and I need to not waste any time with the people who don't because it's more profound than just a waste of time. They're going to ask me for requirements that don't matter to creating a different future because they're conventional thinkers who live in the present. That's the don't let this happen.

to you scenario is not having the courage to be disliked, not having the courage to say, I don't need everybody to like this idea. In fact, it's a feature, not a bug. What happens in a lot of those cases is the entrepreneur talks to too many conventional thinkers, and they spent too much time engineering features to handle the objections of the conventional thinker. And now they're building features that don't flow from their insight. And I say this to founders when they pitch VCs as well. I say if most VCs like it, now I'm kind of worried because it's not controversial enough. So like with founders, what I say is, slide one is, here's what we do. Say it like I'm a three-year-old, like I know nothing. We're Airbnb. We let you rent an extra

room in your house. That kind of simplicity. Right. And then the second slide is, here is our secret about the future. And I encourage entrepreneurs to say, look, here's our secret about the future. if you don't agree with this or you're inclined to disagree right now, I just gave you 45 minutes of your time back. Because like nothing else I'm about to say is going to make any sense to you if you don't agree that my insight is correct. A lot of people are kind of afraid to do that because they're like, well, what if they don't agree with my insight?

I'm like, then you don't want them as an investor. That's what. But a lot of people think of it as, oh, I have to handle their objection. How do I make them agree with my secret? How do I not show that slide in case they disagree? Those are the entrepreneurs who usually don't succeed at creating the breakthroughs. This idea of early customer selection and the importance of it for a company's outcome just seems wildly under explored. And I'm curious if you have any favorite examples from your investing history of a company or a person or a team that just did this phenomenally well.

You told your story about doing it. Is there a company that really stands out as an exemplar of this? I would say that Kasser Eunice, it applied intuition, has done a very good job of this. They make autonomous vehicle simulation software. The thought process is counterintuitive, but I love it, which is we're not going to try to convince customers to find us and buy from us. We're going to pick our customers based on their fitness to the different future we're designing. We're going to select them and convince them to move with us.

We did this back in my days, too. In board meetings, I'd have a slide, and it would have the 30 customers we chose for this year, of which we want to get 10. We wouldn't even talk to any other customers. We spent all of our time talking to those 30, and we ended up getting 12. It's very counterintuitive, but if you get it right, if you're correct about who the innovative customers should be and you get them, they're going to take you to the promise land because they are living in that different future. and you're building what's missing for them in that different future, it's going to give you a huge learning advantage. And it's going to give you an acceleration because they tend to be bellwethers for other customers.

Word of mouth spreads that, oh, this is a new thing that's happening. I want to join that movement. Oh, who knows about this? Oh, these customers. And if they're all your customers, then it becomes a fate of complete. It becomes predestined that you can get leading market share, become the category king or queen of the future category that gets built. It's sort of shocking that you mentioned 90% of your exit values come from pivots. You've already mentioned you were early investor in Twitter and what became Twitch.

It was called Justin TV and Lyft. What was shared in common? I'm sure there's more of what is required of the teams to be able to do that at all. Why was that possible in those companies to move to something different than what they began? with. One of my favorite ways to describe this is a book I like Jonathan Living's and Siegel, and he's this Seagull that wants to fly faster than anybody ever. But what people forget about that book is he's also an outcast. He's a misfit. All the other seagulls are like, dude, you're crazy. Just be a seagull. Just eat crummy scraps on the top of the ocean. And that's

just do seagulls the way seagulls ought to be done. Justin Kahn, I look Justin up, online. And I find out that he started a calendar company called Kiko. He sold it. on eBay for $250,000. And I'm like, who does that? Sells their corporation on eBay. And so I thought, these are the kind of people that bend the arc of the present to a different future. They do things that make other people uncomfortable that don't seem normal.

What I liked about Justin TV, first of all, I told Justin to his face, I think this idea is stupid, but I love the insight that live video on the internet's going to be a thing and it's hard and that CDNs will improve it over time. I like that. and I just like the fact that you're the right kind of crazy. So are the people on your team. Twitter was interesting because I'd invested in the prior company Odeo, which went out of business.

Evan gave me my money back. And when he was giving me my money back, I said, hey, well, this IP that you're going to take and put it in your incubator, do you have any ideas? He said, well, we've got this one idea. We're going to call it voicemail 2.0 or TWTTR. And what does it do? Well, you say what you're doing in 140 characters or less.

And that's all it does. There's no roadmap. There's no revenue model. I'm not even sure it's a product. I don't know if it's a company. And I said, well, Ev, why do you think it could be? And he says, well, the way I figure it is, I wrote blogger software, a million people wrote blogs. Podcasting's harder.

There's just more involved. And plus, Apple just took away the business. But, like, what if you allowed people to write microblocks? Like, maybe 10 million people would do that because it would be super easy. And if 10 million people wrote micro blogs, I think that the burden and proof would be on the people who are negative. And I kind of got this shiver kind of thing. And I was like, if you ever take money for this, I won't invest as soon as you take your first

nickel. And so that was Twitter. Lyft, we talked about GPS and smartphones, everybody having smartphones. You could imagine sharing economy goes mobile. Airbnb, which I passed on, I failed to tease out Brian Chesky's earned secret. Brian didn't have much money, wanted to go to a conference in town, put up his apartment and an air mattress on Craigslist, and got several hundred people wanting to rent it. And he was like, wow, that's really curious. Why is that?

And they found out it's because there's no hotel space. He's like, I wonder what's up with hotels in the first place. How long have hotels existed? Why are there hotels? He had a hypothesis that hotels work because people trust them versus. a stranger's home. But he's like, if you had ratings and review system and you took really awesome photographs, couldn't you create trust in people's houses? Well, if I had heard that explanation, I would have invested for sure. But the problem is, he comes to the meeting. He's got cereal boxes,

Obama's and Captain McCain Crunch. And he says, hey, Michael Seibel, who had introduced us from Justin TV at the time, says you prefer seeing product demos to slides. I'm like, and how. And so he tries to launch the product, and it doesn't work. And so I'm like, okay, well, let's just look at the slides. He's like, I didn't bring any. I was going to show you the product. And so we're sitting there looking at each other in this room full of cereal boxes. And it's like, you haven't made any progress. I really wish I'd figured out how to tease that earned secret out of them. It was only later that I learned that earned secret. And so whenever we pass on a deal that we should have done, I always go back and interview the founder and try to coax out what the real secret.

it was that they had and then apply that to our mental models so that we'll always tease out the insight. Because if their presentation's bad, but they're still great, I'm the idiot. That's my problem, right? I can't say, well, who can blame me that presentation was so bad? No, of course I should be blamed. My job is to have a better radar for these insights and secrets. And so it was my failure, or not his. I didn't intend to do this so linearly kind of marching through your lessons learned in company progression and development, but I'm enjoying. it. So I'm going to go to the next step, which is, so we've got customers. I love this idea of driving for no and really being specific about choosing your customers. So let's see you have

those 12 of the 30. What have you then learned about customer development and using good customers to your advantage as you now start to get to the stage of the company that maybe we're, at least in the liquid stage, in your analogy, real product, doing real things, teams growing. At this stage, what does great look like? What are the best that you've seen do? Yeah, so in the product breakthrough, right, you're in zero to one. You're trying to create a product from scratch that's unique that people are desperate for, that flows from your insight. And at first, the founders are doing most of the selling.

But then you start to see, oh, my gosh, people really want this. They're pulling product out of us. Now we have to ask ourselves, can we begin to create the early machinery of a growth engine? What a company does when they achieve product market fit, they transition from zero to one, value hacking product breakthrough to one to X growth hacking growth breakthrough. And I like to say value hacking and the early days of product market fit, it's like Earth, and growth hacking is like Mars. And now you've got to be like Mark Watney.

You've got to use science. When you're doing the value hacking piece, the founders are conjuring up a product and they're being a jazz band, more like McGiver, more like Wonder Woman kind of stuff. you're James bonding your way through it. You're audibling at the line of scrimmage and improvising until you find it. Well, one to X is really hard for some founders to transition to because all the stuff that got you to this point isn't going to get you to the next point. In one to X, rather than invent something new from scratch, you have to copy the thing that works on a repeatable pattern. And you have to transition from being McGiver or James Bond or Wonder Woman to VP of nothing.

So I like to say that we have all kinds of different growth gears, whether it's your product economics, your marketing economics, sales economics, upsell, all your growth accounting. We need to instrument those things so that we can guarantee that we'll achieve a very discrete growth objective. And so now value creation totally changes yet again. It changes from creating something brand new to making the machinery work for you to do the same thing over and over again very rapidly. And the founders have to be willing to make that shift. They have to be willing to realize that they need to add more people to the team, that they do need some sheet music now, that they do need some dance steps now. And where they get in trouble is they try to act

like they did in the old days and that you find a line outside of the founder's door saying, we used to be focused, but now I don't know what direction we're going in. We're doing too many products. We're trying to sell too many things. Sales is confused. It happens quite often. And it's really sad to see it when it does, which is the founder does a great job of zero to one. Then they go raise a big VC round from somebody awesome. Everybody's high five at each other at the table. And then they just go right off the cliff. So I like to say that getting into growth first mode, it's like Hertz car rental. If you back up, the tires will explode. Once you decide to go forward, you have to be all in on going forward, it's like making a forward pivot.

And so you have to be emotionally, strategically, and sort of intellectually prepared to place that bet and not look back when you shift from product first to growth first. Who made that transition better than anyone else in your memory? Who's the best growth executive that was also a founder? I think Todd McKinnon at Octa was quite good at this. And part of why he was so good at this was not just that he's good, but he hired this guy to run sales, their CRO at the time, Adam Arons, who was a stud. He himself was a great startup founder and executive, but he also was a great recruiter. He was great at recruiting people in the positions where you had to fill the slots to create a predictable growth machine.

As you think about, again, harkening back to your point on corporations versus startups and who will dominate returns from, here and market cap from here. One thing we haven't talked a lot about is kind of the investing landscape. And if you think about floodgate, your firm's history, you were one of the first, if not the first major seed firm in the early 2000s. And you could see, you could tell the story there that you were an apple and a sea of bananas, right? Like you were something new. That's definitely not the case today. There's more bananas than one can count. Given that, how do you change? Like, what do you think you need to do as an investing firm? So kind of an entrepreneur question for you, to make sure that you continue to offer an Apple to founders that might be starting one of these

exceptional new breakthrough firms. Yeah, so what we've done in recent years, because we want to force a choice, is we've created, we affectionately refer to as awesome people networks. Right now we have about three different ones. So some of them are like super founders who've had exits greater than 50 million already. Some are builders who just want to build and they're building things that are related to the inflection we care about, and they're just gone down the rabbit hole of getting interested in it. What we try to do is we try to help those people however we can, but the primary ways we try

to help them is we try to give them our insight development frameworks so they can stress test their ideas. And then we also just try to help them get emotionally ready for what it's going to be like to be a breakthrough builder. There are going to be times where you get negative PR that is completely unfair and not true. There are going to be times when you get, rejected nine times out of 10, and that's actually a sign of progress. Just helping them get in the headspace of the mission of the breakthrough requires you to have the courage to be disliked, by definition. So I'd say those two things, okay, now fast forward if they're going to do a startup, ideally we just write a check and they never pitch anybody. We've worked together for a while now.

We're simpatico. You don't have to go speed dating. But in the case that they do pitch folks, I like to say, look, here is the choice. Do we want to work together or not? And like if we want to work together, why do you need to go pitch 10 people? Because you're going to get to know them at best for all like two hours before you have to decide what matters more to you? Working with who you want to work with or collecting term sheets. If you want to go in the collection of term sheets business, I'd be happy to coach you through that auction. I won't participate. But hey, all the best. That's how we want to force a choice and not a comparison. We're not doing it because we're about price or whatever, it's just that we want to know if somebody's going to build a breakthrough, you're waging optimistic warfare. And so do I want to go into the foxhole with this person for many years? Is that going to be a fun journey when we get in trouble together because it happens every time? That's kind of what we've been focused on. Now, of course, sometimes we're one of ten of the usual suspects when an entrepreneur pitches a bunch of people. We don't know them yet. And we have to compete for those. But if we can predict who's going to be great in the future, that's a way that we can

avoid mindless competition. If I could somehow magically pull all the people in those awesome people networks and everyone else that you've given this flame of the insights frameworks and the different ways that they could stress test their ideas, the only question I asked everyone was, what was the most useful stress test of your insights that Mike and his team gave you? What do you think the top answer would be? I think they would group it into roughly two things. inflections matter a lot because they beget the opportunity for breakthrough in the first place and that you have to start a movement. How do you start a movement?

You move people, but you also engage in the discipline of category design. And so I'd say that they would say that our understanding of inflections and startup category design or next level compared to most people. We haven't mentioned that term category design quite yet in the conversation. What do you mean by that? I think I know what you mean, but I want to make sure what does the process of category design look like. Most people think of category design as like a three-letter acronym. What's our message? Are we CRM? Are we ERP? Are we XRM? Right? That's not what it is. And to use kind of a mundane example,

because it's so illustrative, Clarence Bird's Eye, Bird's Eye is up in the Arctic Circle. He sees some Eskimos fishing, and they catch a fish, they put it on the ground, both sides, and then they put it up against their igloo. And he's like, what's up with that? And they say, well, we're flash freezing these fish. Why do you do that? Well, we want to catch a whole bunch of fish, but eat them over the course of many days. He's like, huh, that's interesting. I wonder if you could do that with fruits and vegetables. And they're like, I don't know, we don't have any of those up here. He creates this process to flash freeze other things, meats, fruits, vegetables, and he comes up with a product that allows you to buy frozen food at any time of the year. But he didn't just say,

I'm in the pre-packaged frozen food market. That's my category. Think about what he had to do. He had to convince supermarkets to have a frozen food aisle, freezers in their aisles. He had to convince the transportation networks to have frozen cars on trains to transport his food. And then he had to invent the mechanism to freeze it and he had to invent the mechanism to package it. You had to have all of those things to create the category of frozen foods. And so category design is understanding what is that minimum viable future. What are all of the elements of that minimum viable future that I as the entrepreneur have to pull together and then who will be the folks who initially move to that different future?

Who are going to be the first train companies that are going to accept my vision? Who are going to be the first supermarkets that put a freezer in their aisles? How do I prove that minimum viable future? And then there's people who can't ever get fresh fruit who are like, oh my God, where have you been on my life? This is amazing. was somebody comparing bird's eye frozen vegetables to whatever else? They didn't have vegetables in season, if at all, in that supermarket.

It wasn't the best. It was the only. To me, that's a really good example of category design. But what you're trying to do is you're trying to map out the minimum viable future, and then you're trying to figure out who's going to move to that minimum viable future and what is necessary to get them to move. That's why creating a movement and creating a category in many ways be thought of is the same thing. I always love when, as a litmus test for this, when there's something new that people are trying to understand, and you hear people analogize it to another company, but the company that they choose to analogize it are all very different from each other.

People are just like scrambling to stuff something into an existing category, but they stuff it into like 10 different categories. That seems like an interesting litmus test. Yes. And this is why I like to say thinking of a category as a market for a startup is wrongheaded. It's better to think of it as a movement. to a different future. And the reason is that startup markets, just like startups aren't companies, startup markets aren't markets like company markets are. A company market can be segmented, targeted, categorized, classified, sized. It has an available market. A startup market starts at zero, and then a movement gathers, and the movement accelerates,

and the market emerges from the movement. It emerges as a result of the movement capturing the conventional wisdom. And the inflection's power, a breakthrough that creates a movement that causes a change in the way people think and act in the future. As you survey today's landscape, a lot has changed about the world in the last 18, 24 months. What are the inflections that you are most closely paying attention to today? I'm paying a lot of attention to crypto. I'm paying a lot of attention to crypto. I'm paying a lot of

attention to synthetic biology or AI applied to life extension has always bugged me as a term. Carbon capture. Things that change the future for humanity in a meaningful way are the main things that I'm looking at. There's a lot of things that are interesting to me, too, about just the commoditization of AI software. And so normal startups are going to have access to AI capabilities that would have unthinkable even five years ago.

So I think that's interesting. You think that that's sort of the same story as the access that they've had to network and computer infrastructure by the cloud? Like, is it effectively the same story again that you need to hire out that function and therefore move a lot faster? I think that, but I think also just when I really think of AI, what is it doing? It's impacting business fields where the cost of predictions are high and the people who make their predictions are expensive. What I like to say is that most inflections take something that usually in the past,

was scarce and expensive, and they turn it into something cheap and abundant. To me, the implication of AI is that it allows what was formerly difficult and expensive predictions to be made well enough at commodity prices and distribution. It seems like early in your life, your experience with, I think it was an HP 35 calculator, set the tone for your view on things like leverage and abundance and technology. Can you just describe that little episode early in your life, and how relevant it remains today. Yeah, and it's funny how just sometimes, you know, you're just born at a certain time.

But like when I was in first grade, I wanted an HP calculator. In fact, I have it in my office here. I couldn't get one at the time. It's too expensive. So the cost of an HP calculator back then at a day's dollars would be like $3,000. That's probably not very practical for first grade, especially my parents didn't have much money. They said, hey, you know, before you get a calculator,

you've got to learn your times tables and division and long division. and no, not just with remainers, decimals, too. And I just kept learning this stuff. Well, eventually in the third grade, calculators were already a lot less expensive. You could go to Radio Shack and get one. And so we went to Radio Shack and got two of them, one for me and one to take apart. And so my dad and I took it apart, and he got a bunch of wires and soldering irons. And he would explain to me, okay, this is a light emitting diode, and that's what this does.

This is the CPU that's the brain. this is the keyboard and how it works. And then we would take wires and solder all the pieces together. We bought us on-off switch at Radio Shack and soldered it to the piece of plywood. And then did wires from the starting switch to the calculator, disconnected the power switch on the real calculator. So we just did stuff like that. And I just got really interested in.

First, it was calculators that personal computers came out. And my dad was part of the original efforts with the IBM PC. I got to use one of the early version. before it was commercially out. And so, yeah, I just kind of grew up as a child of the PC revolution. And it started out as a hobby. See, the other thing I think that matters about startups in today's world is, I think that we're shifting from mass production, mass distribution,

and electricity animating the economy to mass computation, mass connectivity, and algorithms and code animating the economy. Startups, for me, went from something interesting, but kind of on the fringe of business to now all of a sudden the startups that matter in the world and the companies that matter in the world do it this way. What are the companies that people are excited about today? Amazon, Tesla, SpaceX, these are companies, most of which got formed after the internet revolution. I think we'll continue to see scalable startups be the driving and defining force in the economy going forward. Does that then, as a knock on effect,

mean that venture capital, which has been, I think it was your term, a cottage industry for a lot of its history will no longer be that going forward and will look much more like, let's say, Wall Street looks as the finance mechanism behind the corporation behind the mass production, mass distribution that needed Wall Street in big dollar amounts. Does VC then become that in the future and drastically change from what we see today? I think so. And it kind of depends on how you define VC, right? But like I would say that the amount of money that I believe will go into private tech startups before they go public or exit is going to explode. And why do I believe that? Well, if you believe the thesis that I just outlined, you'd say, okay, let's say the stock market is worth

30 trillion or so right now. I don't know if precisely that's right, but I think that's in the ballpark. Let's say 10 years from now, you think it's going to be worth 60 trillion or more. Where is that value creation that come from? I think increasingly it's going to be big tech incumbents and future tech startups. And so if you believe that, if you're an investor, you want to be in these private startups. You want to be funding Airbnb when it's worth a billion dollars or Zoom or Slack or any of these companies. And how much money is invested in the stock market is like $30 trillion. As much venture capital is being raised right now, even at the highest point in human history,

it's nowhere close to the market gap of the NASDAQ or the New York Stock Exchange. Is all that money pouring in? Would you call that? VC money, I'm not sure. So it kind of depends on your terms, but I do think that private dollars available to startups are going to radically increase because I think the world is going to decide that scalable startups are the foundation of the meaningful companies of tomorrow. What is the hardest or most difficult class of things that you face in your chosen career? Like what happens again and again that when it happens is just always tough? When the startup fails. The margin between.

total glory and making it to the promised land versus just abject failure is pretty thin. And it's funny, we haven't really covered this yet, but part of the reason I started to geek out on these startup mental models is I worked with a bunch of founders who would spend five to ten of the best years of their lives busting their ass in service of an idea that just wasn't big enough, that never could be big enough. When you're with these people as co-conspirators, they're your peeps. You know them. You go to their weddings, they're people that you really care about as people. And so I also felt like I kind of owed it to them. That may sound a little bit schmaltzy, but I kind of felt like it would be helpful if we could

come up with ways for the talented founders of the world to know whether an idea that they were pursuing was worthy of their talent and sacrifice. So the number one reason we pass on a deal is when we say, I'm sorry, I just don't think that idea is as good as you are. But the number one hardship is true breakthroughs are a rare event. And no matter how good you aren't picking, you're going to be wrong just as often, if not more often, but right. And real people are going to be affected by that. How do you do that well? So in your role as part of a failure, what have you gotten better at or seen others be good at when it comes to managing failure of companies, especially when they've put heart and soul over five or ten years into it?

Yeah, I think that the main thing has to do with them, but also us. I try not not to blame them for the failure. So, for example, it would have been easy after Odeo didn't work out to say, you know what, I think I've had enough of that. I don't really want to experience what that was like anymore. Odeo wasn't Failing. Odeo was a failure because it wasn't the right idea at the right time. And it's like if Apple's going to get podcasting away and they have a monopoly on playback devices, you just don't have a business all of a sudden. The mistake that I can sometimes make is to assign the blame for the startup failing to the capabilities of the founder. And then I missed the opportunity to work with them on the next thing.

It'll be great. But then I think I can also help the founder sometimes in just saying, hey, look, you're not a failure here. It's just the experiment we ran was proven invalid. It's not you that failed. It's the experiment that turned out untrue. Let's get on with life. Don't beat yourself up about it. Don't let it affect your confidence in your ability to change the future.

Mike, I feel like this is one of the best conversations that I've done that you could just hand entrepreneurs and have them just pick up a million useful things to make their journey a bit smoother. I'm sure none will be smooth, but smooth a few of the bumps, at least, and I've so enjoyed it. I asked the same closing question of everyone, can't wait for your answer. What is the kindest thing that anyone's ever done for you? Gosh, there's so many. I'll give you two if that's okay. So one time when I was a teenager, I just learned how to drive.

and I'm learning how to drive in my mom's station wagon. And I'm going kind of slow because I'm a little bit concerned. And a truck gets fed up with how slow I'm going, tries to pass me on the turn, hits the front end of my mom's car, totals it. I don't even have my license yet. I have my learner's permit. And I'm just like, that's it. I'm out.

I'm not driving. I'm done. And my dad's like, no, you've got to learn how to drive. And like, anybody can do this thing. Look at how many people are driving on the road. How stupid a lot of them are. It's like not hard. It's not a hard thing to learn how to do.

So the next day, he's like, okay, we're going to go out driving again. And he gives me the keys. We didn't grow up with a lot of stuff. My dad was very self-made. He'd saved his entire life to get a Mercedes. And I think he'd had it for like a month. He gives me the key. And off we went.

Amazing. So I had to learn how to drive it by dad's one-month-old Mercedes. You think back on it, what he really gave me was the gift of his truck. that had a big impact on me and a lot, well, no pun intended, although some colleges I applied to describe an event that had an impact on your life, and that was free move. Yeah. What else? In investing Bruce Dunleavy at Benchmark, one time I was talking to him about this idea,

a wacky idea of a seed fund. And he said, well, have you ever thought about pitching LPs and seeing if you could raise it? And I was like, Bruce, I can't even spell LLP, right? I don't know anything about LPs. I don't even know an LP. I'm not sure I even know what you're talking about. And he says, well, wouldn't you just like to see how they'd react to it? I mean, what have you got to lose?

Why not? Right. So he picks up the phone. He calls Phil Horsley at Horsley Bridge, probably one of the best known fund of funds on the planet. Today, too. Even today. Yeah.

He introduces me. He says, hey, there's this guy. I think you should meet him. By the time I get back to my office, I have an email from him and his assistant. When can you meet? And so I met Phil Horsley, and he ended up investing one of the first believers in seed funds. He invested in our second fund. Bruce didn't have to do that. Amazing. I just love these stories of intense generosity and selfishness when it's not required. It's a common theme among these. I think I've done 300 of these now. I love it as a closing spot, Mike.

I've so enjoyed our conversation. Thank you so much for your time. Yeah, sorry, you got me a little worked up about the car crash. I love it. It's what makes life worth living, man. So good. Thanks for taking the time. This episode was brought to you by Snack Magic. In this four-part miniseries, I sit down with founder and CEO,

Shaanuk Amin, to talk about the origins of the business, how they manage the complex logistical operation, and what lies ahead in the future. In this week's episode, Seanic and I discuss his vision for the company's future and international expansion before closing with some of his own favorite snacks and swag. If you had to dream a little bit and think about not the near-term future, but the long-term future of where this business could go. How do you describe to

maybe to your team or people you're hiring the potential vision here, the five, the 10-year future? It's two things. It's all things, snacks and beverages. We want to be the one-stop shop for all things, snacks and beverages. That includes wholesale. That includes gifting, that includes ordering for yourself, and a very personalized way to order snacks and beverages. So that's one. And then the other vision is going broad. You want to be all things gifted, especially corporate gifting. So that could include snacks and beverages, could be wine, could be dessert, could be swag, whatever that is.

So that's how we define it internally or how we envision it. How about the international side? So you already mentioned that you can ship anywhere. Maybe there's just an extra fee. But what are your geographic ambitions for the business and how does it differ once you leave North America? We are already global. We launched global October of London.

last year. And that has added a whole other dimension to the business because these days, because everybody is remote and pretty much everybody's same on Zoom, no matter where they are, what's happening is attendees are attending from outside of the U.S. Many companies are hiring people from outside of the U.S. So we've made global, it's 20% of our business and is growing faster than the U.S. side. We've shipped to 135 countries. We did that in the first two or three months. Do you have three favorite snacks and three favorite swag items you can give us? Yes, sure.

So I think I like the Stroop Waffle from Belgian Boys when I want to. Oh, yeah, those are damn good. And then on the healthy side, like, there's this fosh as a brand. And I think they have these marinated artichokes. I just had two packs before this call. So I think those would be my top two snacks. On the swag side, yeah, I'm a big, like water guy. So I have this water bottle here.

We also have some fun, like coloring books and stuff like that. You know, when I want to zone out, not think about snack magic, just do some coloring. I love it. Good place to end. Waffles, artichokes, and coloring books. I'll take it. That'd be an eclectic box to receive.

Well, this has been great. So fun to learn about the business. Like I said, it was really fun to go through the process myself. Definitely something I'll be using for my various teams. And appreciate your time here today. Thank you, Patrick. If you enjoyed this episode, check out join colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning.

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