Invest Like the Best with Patrick O'Shaughnessy - Rahul Vohra - Using Emotion to Design Great Products - [Founder’s Field Guide, EP.1]

Episode Date: October 1, 2020

Today’s episode represents a new chapter for Invest Like the Best, so requires a longer introduction than normal. Starting today, I’ll be bringing you two episodes per week on the same feed. On Tuesday’s, I’ll focus on investors, and on Thursday’s, I’ll host builders—founders, CEOs, and operators from all different fields. We call this new Thursday series Founder’s Field Guide. There’s nothing more interesting to me than how great businesses get build, and how investors can identify those businesses at the right time. We’ve already recorded with founders build companies in food, technology, infrastructure, shipping, collectibles, and many more categories. The goal each weak will be to have a builder share what they’ve done, how they’ve done it, and what they’ve learned along the way. We view this as a critical next step in furthering our mission: to capture and openly share the world’s best knowledge on business and investing. Onto the kickoff episode with Rahul Vohra. Rahul is the Founder & CEO of Superhuman, an extremely popular product for managing email. Rahul describes himself as a Computer Scientist, Gamer, Entrepreneur, and Designer. You’ll see quickly why it’s the intersection of these areas that sets Superhuman apart. We discuss why emotion matters when building products, and how other entrepreneurs can learn from his experience. Please enjoy the very first episode of Founder’s Field Guide, and stay tuned in future weeks as we host leaders from Nike, Cisco, Twitch, and so many more…listen in as we explore the world of cannabis, baking (not that kind), manufacturing, hardware, software, and more. Let’s dive in.   This episode is brought to you by Microsoft for Startups. Microsoft for Startups is a global program dedicated to helping “enterprise-ready” B2B startups successfully scale their companies. If you’re a founder running a B2B company targeting the enterprise, you should definitely check them out.    This episode is also sponsored by Vanta.  Vanta has built software that makes it easier to both get and maintain your SOC 2 report, at a fraction of the normal cost. Founders Field Guide listeners can redeem a $1k off coupon at vanta.com/patrick.    For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes (3:56) – (First question) – His interest in game design and emotion in software creation (5:15) – Key elements of game design (6:23) – Toys in digital software creation (8:48) – Finding success in boring software solutions (11:19) – Getting confidence while building when there are no real customers (14:08) – How they landed on their final product (15:40) – The Superhuman Product/Market Fit Engine (20:46) – Determining software price (21:55) – Positioning Your Startup is Vital — Here’s How to Nail It (23:09) – Positioning: The Battle for Your Mind (24:13) – Monetizing Innovation: How Smart Companies Design the Product Around the Price (26:36) – First big break for the business (29:04) – How technology companies actually grow (32:15) – Branding a software (33:57) – How he evaluates a company brand as an investor (36:07) – Questions to ask founders when considering an investment (37:35) – How the distribution of Superhuman worked so well (41:25) – Most common question asked by VC’s about Superhuman (43:00) – Why they do manual onboarding of customers (43:05) – Daniel Ek Podcast Episode (45:10) – Cost structure of a busines looking to reach the billion-dollar valuation (47:18) – Designing for flow in software business (51:21) – His design philosophy and their joy formula  (58:03) – His superpower (1:00:46) – The power of therapy (1:02:50) – Why he invests in other companies (1:05:05) – Trends in the technology space that have him excited (1:07:28) – The future for Superhuman (1:10:26) – Kindest thing anyone has done for him  

This episode of Founders Field Guide is brought to you by Microsoft for Startups. Microsoft for Startups is a global program dedicated to helping enterprise-ready B-to-B startups successfully scale their companies. The program has been around for a couple of years, but I recently became intrigued when former Invest Like the Best guest, Jeff Ma, took over. Microsoft for Startups provides companies access to technology, including Azure, Cloud, and GitHub, coupled with a streamlined path to selling alongside Microsoft and their global partner ecosystem.

Microsoft for Startups has a very compelling approach to working with startups and driving their long-term business value. If you're a founder running a B2B company targeting the enterprise, you should definitely check them out at startups. com. To hear more about the program, stay tuned at the end of the episode to hear from me and current program member, Abnormal Security. This episode is also brought to you by Vanta. Does your startup need a SOC2 report to close big deals, or do you already have a SOC2 report and want to make it easier to maintain? Vanta has built soft for, that makes it easier to both get and renew your SOC2. With Vantas continuous monitoring solution, you avoid hosting auditors on site and taking screenshots to prove that you're compliant, so you can focus on building your business. Vanta partners with audit firms who file your SOC2 report directly inside of Vanta at a fraction of the normal cost. Hundreds of companies,

including more than 100 Y Combinator businesses, are leveraging Vantas today to streamline compliance and focus on building their businesses. Founders Field Guide listeners can redeem a $1,000 off coupon at vanta.com forward slash Patrick. That's vanta.com forward slash Patrick. 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. You can find more episodes at investorfieldguide.com. Patrick O'Shaughnessy is the CEO of a 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'Shaunacy 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 Asset Management may maintain positions and the securities discussed in this podcast.

Today's episode represents a new chapter for Invest Like the Best and so it requires a longer introduction than normal. Starting today, I'll be bringing you two episodes per week. on the same feed. On Tuesdays, I'll focus on investors, and on Thursdays, I'll host builders, founders, CEOs, and operators from all different fields. We call this new Thursday series Founders Field Guide. There's nothing more interesting to me than how great businesses get built and how investors can identify those businesses at the right time. We've already recorded with founders building companies in food, technology, infrastructure, shipping, collectibles, and many more categories. The goal each week will be to have a builder share what they've done, how

they've done it and what they've learned along the way. We view this as a critical next step in furthering our mission to capture and openly share the world's best knowledge on business and investing. On to the kickoff episode with Rahul Vora. Rahul is the founder and CEO of Superhuman, an extremely popular product for managing your email. Rahul describes himself as a computer scientist, gamer, entrepreneur, and designer. You'll see quickly why it's the intersection of these areas that sets superhuman apart. We discuss why emotion matters when building products and how other entrepreneurs can learn from his experience. Please enjoy the very first episode of Founders Field Guide and stay tuned in future weeks as we host

leaders from Nike, Cisco, Twitch, and so many more. Listen in as we explore the worlds of cannabis, baking, not that kind, manufacturing, hardware, software, and many other topics. Now, let's dive in. Proho, thank you so much for doing this with me today. There's a whole range of issues that I think we'll talk about for the first time with you, given your background and experience. And I thought a fun place to dive in would be with this idea of game design and emotion in software or digital products. Why are you interested in this concept? And what have you learned building superhuman? Well, at superhuman, we build software like it as a game. And that has been core to why people fall in love with it. But most software companies don't do this. Most software companies worry about

what users want or what they need. But if you think about it, nobody needs a game to exist. There are no requirements. So when you make a game, you don't worry about what users want or what they need. You obsess over how they feel. And when your product is a game, people don't just use it. They play it. They find it fun.

They tell their friends. They fall in love with it. So this idea of game design turns out to be an altogether different kind of products development. And it changes how people react. Today, our business software feels like we have to check our email. We have to submit expense reports. We have to enter data in our CRM. But what I like to ask is what if we could make software feel less like work and more like play? And with game design, we can. Talk a bit about the key elements of game design. What makes for a good game with something as mundane sounding as email? What are the major lessons you've learned as you've experimented or tried to

build that concept into the product? Well, I've been obsessed with this idea of game design, really, for my entire life. As a kid, I learned how to code just so I could make games before I was a founder. I worked as a game designer. And as a founder, I've gone deep into the principles of game design. And as it turns out, there is no unifying theory of game design to create good games. We need to draw upon the art and science of psychology, mathematics, storytelling, interaction design, to name just a few.

And at superhuman, we've identified five key factors to consider. Goals, emotions, toys, controls, and this elusive concept of flow. And across these, we've identified many principles of game design. So one principle would be make fun toys and then combine them into games. And the question might I sometimes like to ask people is, well, what do you think? Are toys the same as games? To describe a toy in the digital software sense, what would be an example of a toy? Let's actually differentiate toys and games, and then I'll give you an example of a toy from superhuman.

And it comes down to natural language actually. We play with toys, but we play games. A ball is a toy, but football is a game. And as it turns out, the best games are built with toys. Why? Because then they are fun on both levels, the level of the toy and on the game itself. Now, in Superhuman, a favorite toy is the time autocompleter, which you use to snooze emails. You type whatever you want, it can be gibberish, and it does its best to understand you.

For example, 2D becomes two days. 3H becomes three hours. One MO becomes one month. And the time autocompleter is fun because it indulges playful exploration. And it's not long in onboardings before people starts doing things like, I wonder what happens if I keep on typing 10th, just the number 10th. Well, it turns out that's October the 10th at 10.m. Or how about a sequence of twos? Well, that's February the 2nd, 2020 at 2 p.m. And then you see people start trying more complex inputs like in a fortnight

and a day. And it's not long before folks start finding pleasant surprises. For example, time zone math happens without you having to think about. So you can type in 8 a.m. in Tokyo. And it does the math and it tells you that's 8 p.m. Eastern Time. And then most people are really delighted to find out that you can type in things like never. I want to choose this email until never. The email will literally never come back. I'd say to our listeners, and to answer your question, what is a toy in digital software form? Consider features of your own product. Do they indulge playful exploration? Are they fun even without a goal? And do they create moments of pleasant surprise? Because if so, then congratulations, you have a toy and you're on the way to building a great game.

And this is something that I find most companies don't do, because like I said, most companies are instead obsessed with what do people want? What do people need? And these are perfectly good questions. Do we have products market fits? It's our net promoters score high. Again, you need all of these things. But there's this extra level that you can get to when people find your software fun because, like I said, they don't just use it. they then play it. Do you think the biggest opportunities for building companies like this is in the

most mundane categories? Like I saw an example of a course you've been successful. So now you hear the superhuman for X, but you see the superhuman for calendars, for example. Do you think that those kind of boring, longstanding haven't changed in a long time business categories are the best ones to attack with this mindset? I think so. I do think the superhuman for X category is a little bit wider than just game design. And it's something that's hard my investing partner and I look at very closely. We look at things like, is speed, everything? Is it a core value proposition? So for superhuman, it is. It is actually the number one feature. In superhuman, every interaction takes place in 100 milliseconds or less. Searches feel instantaneous. Our customers save many hours per week. They

reports getting through their inbox twice as fast as before. And many of them actually see inbox zero for the first time in years. And it's really hard to pull all of that off, both from a product perspective as well as the design perspective, as well as an engineering perspective. To your point, the areas where there's most headroom for this, where the fruits is hanging lowest, so to speak,

is indeed in those mundane categories. Not because the solutions aren't achievable, but because of this thing that Paul Graham calls Schlepp blindness, the idea that it, looks too hard. I think we've had two generations of founders look at Gmail, perhaps realize on some subconscious level that you can build something better, but their mind kind of steps in and says, nope, that's too hard. You can't go up against Google, you can't go up against Microsoft. Let's take something on that will be easier, that will be faster. And it does take time to take on

some of these mundane areas, because you often end up going against very entrenched products that are operated by incumbents. And Gmail alone has one and a half billion users. And for example, I'm five years into superhuman. I think a lot of people looking at superhuman go, oh, this thing kind of came out of nowhere over the last two years. But in reality, I did have to grind along with all of my team for three years beforehand. And you were building for three years with no clients. Is that right? Yes. Actually, I was personally building with no customers for three years. It was solo founder for about nine months to one year. Then I brought you on board the other two co-founders and our first engineer. And about two years after that point, so three years after I started, we had our first

paying customer. One of my favorite debates in the world of technology entrepreneurship is the debate between sort of the lean model where you're iterating and failing a lot and learning through customer feedback and what I'll call the Keith Rabeoi movie production model, where it's more sounds like what you've done, which is big, long effort that is almost produced like a movie would be with actors and a script and everything else, and you go to market with an incredible product, not one that's been sort of iterated through a crowd. Describe your experience of the three years building. How do you get the confidence that you're doing a good job if there's no feedback from real using customers? Well, it was hard. And I remember it being a very difficult journey for us. So for context,

in the summer of 2015, we started much like any of the software company by writing code. And in the summer of 2016, we were still coding. And in the summer of 2017, we were still coding. And I felt this incredible, intense pressure to launch, both from the team and also from within myself. After all, my last company, Reportive, had launched, scaled, and being acquired by LinkedIn in less time. And here we were two years in, and we still had not launched.

But deep down inside, I knew, no matter how intensely I felt that pressure, that a launch would go very badly. I did not believe that we had product market fit. Although I knew it, I couldn't just say that to the team. These are super ambitious, hyper-intelligent engineers. They poured their hearts and souls into the product. I figured I needed a plan. And so in the April of 2017, I started my search for that holy grail, for a way to define product market fit, for a metric to measure product market fit, and for a methodology to systematically increase product market fit. And that's actually how I came across my product market fit engine, which is how many people know of me. It's that now infamous article on first round review,

where in detail I lay out this engine, this algorithm that we created. And it's actually a blend between the lean startup model and the Ethra Boy fat startup model or the movie production model. I'm actually a big believer in both, and I would say we sit somewhere in the middle. I would say raise a tremendous amount of capital up front. I would say take your decisions as long term as you can. I would say don't put out a minimum viable product, put out a maximally delightful product. But I would also say, listen very closely to your users, listen very closer to your customers and run the superhuman products market fit engine because it really does systematically move you towards product market fits. But in a way that doesn't encourage you to

fail fast. I don't think anyone really wants to fail fast. I think people want to succeed inevitably. And that's really what we've oriented superhuman towards. Of course, I have to ask the question now for the high level overview of that engine, that product market fit engine, why you applied it in the way you did and sort of how you came to the idea? Well, I searched high and I searched low and I read everything I could find. I spoke with all the experts. And then I came across this guy, Sean Ellis. Now, Sean ran growth in the early days at Dropbox, log me in and Eventbrite.

He even coined the term growth hacker. Now, Sean found a leading indicator of products market fit, one that is benchmarked and predictive. Just ask your users this. How would you feel if you could no longer use the purpose? product and measure the percent who answer very disappointed. After benchmarking hundreds of startups, Sean found that the companies that struggle to grow always get less than 40 percent very disappointed, and the companies that grow most easily almost always get more than 40 percent very disappointed. In other words, if more than 40 percent of your users would be very disappointed

without your product, you have initial products market fit. Now, this metric turns out to be more objective than a feeling. It predicts success better than net promoter score. And it's not only the best way to measure product market fit. We then used it to develop our very own products market fit engine. And that's where it becomes sort of this really complex algorithm. I'll do my best to summarize. And perhaps we can include in the show notes a link to the process for our work.

audience. So first thing you do is you survey all your users and you ask them the Sean Ellis question, how would you feel if you could no longer use superhuman, but also three more. Number two, what type of people do you think would most benefit from the product? Number three, what is the main benefit you receive from the product? And number four, how can we improve the product for you? You then analyze the results to question number one. And you'll get the set of people who are very disappointed, somewhat disappointed, and not disappointed. And it's typical for a startup that hasn't been through this process before that their score is in the region of perhaps 15 to 25%. For superhuman, the actual number back in the day of summer of 2017 was 22%. Now, we very clearly did not have

product's market fit, and that may seem sad, but I at least could explain our situation to the team. And most excitingly, I had a plan to increase the score. If a startup is in the sort of five to 15% region, my advice is, well, you might want to consider pivoting either the products or the markets to try and find a higher scoring segment. So you send out the survey, you get back the results, and you never survey any user more than once, you're emailing the survey out, and you then segment. And at this point, you want to understand who are the people who really love your product. And I like to use the concept of the high expectation customer, which is a concept I found from Julie Sopan.

She led early marketing at Dropbox, Airbnb, and many of the great companies. And the HXC is the most discerning person in your demographic. They'll enjoy your products for its greatest benefit and help spread the word. And the most important thing about them is that others want to be like them because they seem clever, judicious, and insightful. And this is best to learn through examples. So we can take a look at two, those Dropbox, and I'll also go over Airbnb. Now, the Dropbox HXC simply wants to simplify their life.

They're trusting, they're organized, they're tech savvy, they want to get time back in their day, and at the end of the day, they just want to know that someone has their back when it comes to their life's work. The Airbnb HXC is, of course, very different. They're invested in being a good global citizen. They don't simply want to visit new places they want to belong. They want to experience Paris as if they really live there. And Airbnb's early success came from focusing on these influences and these tastemakers.

So the big question is, how do you create your own HXC? Well, go back to the survey results. Take all the users who would be very disappointed without your product, and then just those users, analyze their answers to question number two, who do you think this is best for? This is a very powerful question, as happy users will almost always describe themselves using the words that matter most to them.

And you can then turn these words into a rich and detailed description of your own highest expectation customer. So now you know who loves your product. Then you go back to all your surveys, you take each response, and you assign to each one a persona. And here's the magic part. You take the users who most love your product,

those who would be very disappointed without it, and you use them to narrow the market. I'll do a simplified example of superhuman to explain this. In superhuman, the set of people who most loved the product were founders, we're managers, we're executives, were business development. And back at that time in 2017, we were scoring less well with sales,

with customer success, with data science, with engineering. And so here's the trick. You deliberately ignore that set you score less well with. You deliberately ignore the personas who don't tend to appear in the set of very disappointed folks. And this is a trick called resegmentation. It's really asking the question,

A question that's not asked anywhere near enough, which is, what if we don't change the product, but we change the market? And then just that resegmentation, the two minutes of effort for superhuman, our product market fits score jumped by 10% from 22% to 32%. And we were not quite at 40% yet, but we made significant progress in two minutes. The algorithm continues, and there's this very nuanced way of how do you interpret feedback, Who exactly do you listen to that you can then use to further increase the product's market fit score?

And using that, we got our product market fit score from 22% to a quarter later 33%, to a quarter later 47, and then 56, and then 58%, just a few quarters later, for superhuman. This is why, to bring it all the way back to the cider of Lean Startup and the movie production startup. I'm a huge fan of being in the middle. raise the money, hire the team, be really long term, build the product you've always dreamed of building, but also run the product's market fit engine so you can ensure you're systematically moving towards products market fit. One of the key insights in the story, I think, is constantly

ratcheting in your focus to the best customer. And even if it seems like you're shrinking your market and therefore your opportunity, you're actually increasing your odds of building something that people are rabid about and in this case are willing to pay for despite there being too enormous incumbent free options in Gmail and, well, I guess Microsoft's not free, but it's part of a package that people are used to using. I'd love to hear your thoughts on with that sort of in the books how you came to the price itself. I think one of the strange things about software is figuring out how to price it is quite hard because there's basically no cost of goods. There's often huge fixed cost to developing it, which I'd like to get into as well. But the

marginal costs are very, very low. So it seems like a strange thing to price software. And at $30 a month, I'm curious just how you came to that number and what other numbers you might have considered. The most important thing, and I say this to every founder I work with, before you try and figure out pricing, you must first figure out positioning. And we started with this wonderful article by Ariel Jackson. It's also on first round review. The title is positioning your startup is vital. here's how to nail it. And Ariel advises using a formula like the following for a target customer who has some kind of need. Your product is in a category. It has some kind of benefits. And unlike the competitors, your product has this primary differentiation. And she gives

the example of Harley Davidson, the only motorcycle manufacturer that makes big, loud motorcycles for macho wannabes, mostly in the United States, who want to join a gang of cowboys in an era of decreasing personal freedom. Now, no matter what you think about cowboys, the era we live in, or this notion of macho wannabes, you have to admit that pretty much nails the Harley Davidson positioning. And I think a lot of their success comes out of really deeply, truly understanding that. Now, we thought about this really hard for superhuman. And so we met with Ariel, who by the way is awesome, and we did further reading as well. She turns out to be the, was the product marketing manager at Who Launch Gmail, so the perfect person for us to work with.

And she also recommended this book, which I would heartily recommend anyone listening to the show, positioning the battle for your mind. We started to ask ourselves questions. Are we the Ford of email? The answer is no. Are we the Mercedes of email? Not quite. Are we the Tesla of email? Well, now we're getting there. And all the way back in 2015, we came up with this position. For founders, CEOs, and managers of high-growth technology companies, who feel like their work is mostly email, superhuman is the fastest email experience ever made.

It's what Gmail could be if it were made today instead of 12 years ago. And unlike Gmail, superhuman is meticulously crafted so that everything happens in 100 milliseconds. or less. And we've since, of course, expanded beyond this very tightly defined target, but it is so important to start tightly defined, like you just said. And when you read this positioning, it's clear that superhuman is a premium tool for a premium market. And once you understand that positioning, you can then move on to your pricing. And one of the best books on this topic is monetizing innovation by Madovan, Ramanujan. Now, Madovan covers a lot of

ways to develop pricing. And we used one of the easiest methods, which is the Van-Westendorp price sensitivity meter. And so in late 2015, we asked about 100 of our earliest users the following questions, at what price would you consider superhuman to be so expensive that you wouldn't consider buying it? At what price would you consider superhuman to be priced so low that you feel the quality wouldn't be very good and so you would not buy it? At what price would you consider superhuman to be starting to get expensive so that it isn't out of the question, but you'd still have to give some thought to buy it, and you still would. And at what price would you consider a superhuman to be a bargain? A great buy for the money. Now, most startups,

most technology companies, in fact, orient around question number four, because they tend to be selling into a market that doesn't exist. They tend to be creating a new market. There are no users for this thing. A perfect example would be Uber or Lyft back in the day. Ridesharing didn't exist. They were in a race to get all the users. so they were in this price war to be a bargain, a great life of the money. But email isn't like that. Everybody has an email account and everyone is using already either Gmail or Outlook. And so we deliberately anchored around the third question, the question that also supported our premium position, which is, when does it feel expensive, but you'll still buy it

anyway? And one can imagine that Tesla did that with the Model S and they've definitely done that with the roadster. And the median answer for the third question for us, was $30 per month. And that's how we picked our price. And the final thing you should do once you pick your price is to do a quick gut check on the market size, assuming your venture back, you want to be a public company one day. For example, how can you grow into a $1 billion valuation? Well, let's assume at that point, your valuation is 10 times your run rate, so your ARR is $100 million. For us, that would be 300,000 subscribers at $30 per month. And that is conservatively assuming no other ways to increase average revenue per user, for example, no new products, you're not going up

market. And we asked ourselves, do we think we can get to hundreds of thousands of subscribers for the products that we have built? We answered emphatically yes, and we went ahead with that price. So it goes positioning, pricing, market size check. I love that. Looking back on the journey so far, what would you identify as the first big break in your favor in the history of the business? the first big break in my favor. Gosh, I feel lucky to have been the recipient of so many breaks. It's kind of hard to pick the first big one. I would say that the most impactful thing was having had the journey of reportive. So for folks who don't know or they don't remember because reportive was some time ago, it was the first Gmail plugin to scale to millions of users.

And our vision for that was to help you be brilliant with people. We showed you everything about your contacts right inside your inbox. When people emailed you, we showed you what they looked like, where they worked, their recent tweets, links their social profiles. We grew very rapidly. And so about two years later, we were acquired by LinkedIn. And at LinkedIn, we ran all of our email integrations. And at Reportive, we'd kickstarted the whole ecosystem of Gmail plugins.

We sort of gave this blueprint to the community. and thereafter you had things like boomerang, mix, max, clear bits, yes way, you name it, they were all kind of using that mechanism that reported had used to integrate with Gmail. Because Gmail doesn't really have, or it didn't at the time have an API or a plug-in architecture. And that was my big break. I think creating this company, which was sort of a cult phenomenon, being acquired by LinkedIn, it lasted a really long time. They only just shut it down this year in March, so it lasted 10 years.

seeing LinkedIn grow, I joined just after the IPO, being there for two years, being around the smartest people in technology at that time. I reported to our head of growth, which as you can imagine, I learned a tremendous amount about virality and brand and word of mouth and how technology companies actually grow. And having the credibility and the track record, collectively, this was all the biggest break. It was so big that when I came out to raise money for superhuman, it was like nothing I'd ever experienced. I raised the first million dollars off a screenshot of Gmail where I just taken a red marker and said, I don't like these things. Why is this here? Why is that there? We're going to get rid of this. We're going to get rid of that. And we're going to make it

blazingly fast. And by the way, our customers are going to get through their inbox prices fast. And with that, I got the first million dollars essentially overnight. And compared to my experience as a first time founder, I mean, it was just a night and day difference. The line in there that's so interesting to me is you learned how technology companies actually grow. I'd love to hear what you learned at LinkedIn about growth. In my first one-on-one with Elliot's, I sat him down, I said, you can imagine sort of young me from about, gosh, I would have been 26 at the time, wide-eyed, bushy-tailed, and like, Elliot, tell me everything that there is to know about virality. I want to make the most viral products in the world. And he said, well, calm down because there is no such thing as true

virality. And I said, well, Elliot, what do you mean? And he said, well, as you know, there is this notion of the lifetime viral factor. This is how many customers or how many users does one user creates over the course of their lifetime as a user or a customer. And he said, you can never sustain that number being greater than one for any period of time. And this is one of the biggest misconceptions that people have about virality. And I said, well, what about LinkedIn was such a viral company? And he said, yes, but our most viral feature, the address book import, only has a lifetime viral factor of 0.4. And he said, and even Facebook, one of the most viral companies of all time, only sustained a lifetime viral factor of 0.7, and that for about 7 to 9 months

during their period of most rapid growth. And I said, well, this is really weird. Then what are the benchmarks for these numbers? He said, 0.2 to 0.3. is good. 0.4 to 0.7 is great. If you're doing 0.7 plus, then that's phenomenal. Well, then the obvious question, the one that I asked is, well, how do companies go viral? And he said, well, here's the dirty secret. It's never a feature. It's never a viral mechanic. At the end of the day, it is always word of mouth. This is always brand. And the secret to LinkedIn success, much like Facebook success, much like any mass market consumer internet brand. It's a People talk about it in real life.

It's because they've established a brand. And that was my first one-on-one with LinkedIn set of growth. It honestly completely changed the way that I thought about software, that I thought about growth. And I think superhuman is a wonderful example of that. We are a brand company. We think of ourselves that way. We have this saying internally that what we make people feel is just as important as what we make. And what we actually make is joy and software form.

and just a few minutes ago we went into the details on how we design for emotion. And you can trace that all the way back to that conversation that I had with Elliot and actually all the way back further to when I work professionally as a game designer. And I didn't know it at the time, but I was acquiring the skills as a game designer to create joy. And all I had to do was put two and two together, put the skill set for creating joy together with the eye-opening insights from Elliot to realize that one of the of the biggest things that we can do as founders, and this has done all too little here in Silicon Valley,

is to create brand companies, to create companies that grow based on word of mouth, because that is actually how the biggest companies grow. Why do you think that happens? So word of mouth, you know, I've often told people about a great product for various different reasons. Are you targeting a specific reason? Like, are you even thinking deliberately about what you want a customer saying to another customer and then working backwards from that to build the brand. I'm just curious what the deliberate strategies are to build a brand company and software. The first thing to do, and this is sort of hard in COVID period, but the first thing to do is to go to lots of cocktail parties and listen to people talk about your products or wherever they happen to hang out. Fortunately for me,

might happen to hang out at cocktail parties. And I would kind of lurk in the conversation and just want to overhear them. And it was always the same when people would talk about superhuman. sort of in that first year, before we really knew what our brand was going to be, it was always the same commentary. People would lean over their drink to one another and be like, you really have to try this thing. It is so fast. Superhuman is just the fastest email that I've ever experienced. Fast, speed, fast. Sure, I could talk about how it's keyboard shortcut driven or that there's a native app, but the thing that our customers talk about is speed. If I could boil it down to one word, it's speed.

And that's how you should figure out what to orient your company around. What is the one word that your customers constantly refer to your product with? Once I knew that, it sort of gave me the breadcrumbs to start following. So I started to interview our customers. I started to sort of conceive the brand in my mind. The sentence, the fastest email experience in the world just sort of popped into my head at that point. And we took it from there. But the where I would start is, what is the one word that your customer is, what is the one word

that your customers refer to your products with. So when you're looking at companies as an investor, there's the classic better, faster, cheaper way of thinking about businesses. Obviously, superhuman is faster as an email client than anything else. When you're looking at companies in which you may become an investor, how do you evaluate the potential for the sort of brand that could drive that word of mouth growth? It's not actually necessary for, I would say, 80% of the companies that we invest. because 80% of the companies don't actually need to push a huge brand in order to generate large

amounts of revenue. Many of them, for example, are enterprise software companies. But there are some that do. A good example would be House. House is this incredible alcoholic beverage. They figured out how to deliver alcohol to the home, essentially by being a low alcohol by volume aperitif that is made from grapes. Anyone who's worked in the industry will understand why all of that's important.

But this means that there's. they can legally deliver alcohol to your home and sell it online. And it's delicious to boot. And they have many flavors. It's house, H-A-U-S, go check it out if you're in the mood to drink something. Now, this company clearly needs a massive consumer internet brand in order to succeed. And we figure it out by going really deep with the founders. Do they intuitively understand press?

Do they intuitively understand demandion? Do they intuitively understand paid acquisition? and realize that paid acquisition won't solve their problems, but that it will amplify all of the other things. Do they understand content marketing? Do they understand business development? Do they understand other channels that might be relevant to them? In this case, does the founder understand all of the ins and outs around alcohol purchasing

and delivery in the US? And the answer for us for all of these things was, for the founder, Helena, was 10 out of 10, top marks. She's just such a phenomenal, formidable founder that she just understood all of these things to a level that Todd and I actually very rarely see. There's only a few of the founders in our portfolio who have that level of deep intuition around brand building. What, when you're looking at enterprise software business, sounds like a lot of your investments are in that category, are the substitute kind of most important questions that you ask of yourself and of the founders when making an evaluation? It kind of pops up to a higher level, and this is our generic formula for all investments, whether they're consumer or their enterprise.

I look for founders who have the following magic combination. Number one, they know how to make something people want, and number two, they know how to make people realize they want it. If a startup only has one of these things, it unfortunately will not be able to succeed. Well, that's on the skills side. There's three of these. Secondly, I look for founders that demonstrates exceptionally high level of grit. And I think of grit as the combination of passion and perseverance. Passion means that the founder will not easily get distracted with new interests or goals,

and perseverance means that the founder will follow through with hard things despite immense challenges. And I found that the founders who are both persistent and relentless move towards making their startup successful faster and more effectively than anybody else. And thirdly, I look for the possibility of a billion dollar outcome. And this is actually our main reason to say no. It's quite feasible to find people who have number one, who have number two, but they don't have a billion dollar thesis right now. I love this idea in the first part of the distribution side of things. Product always is front and center. It should be, but distribution is incredibly important. The way you phrase it is nice, make people know that they want something. Talk to me a bit about how you think through distribution of superhuman. Obviously,

word of mouth is great and can drive awesome business outcomes, but I don't think there are many examples of companies that grow purely on word of mouth, even something like TikTok, which has become so viral and talked about a lot, spent enormous amounts of money on marketing. Tell me a bit about superhuman distribution and what you've learned about software distribution more generally. The word of mouth thing is nuanced. I think that you should spend as much money as the markets will reasonably provide to you on marketing so long as you have word of mouth. The thing I would caution founders against is raising that money or taking out those loans and then spending it without the underlying pull from the markets because that's where I've seen

folks stumble. Now, the superhuman growth story, in the beginning, I always thought there would be three core primary pillars. first of all is virality, more generally word of mouth. Second is PR. And third is content. And we've had really great luck and success with all three of those things. So first of all, on the virality side, we've created an incredibly viral products,

especially benchmarks in our industry of productivity or collaboration, if you will. And especially for single player productivity, we haven't had this level of virality since products like Dropbox, like Slack. That was one of the key things that I would talk about when I did my series B Roadshow visiting all of the venture firms. And one of the things that folks dug in on was, wow, this product is actually really viral. And at the time, about 50 or 60% of our new customers

were coming from direct referral in the product from existing customers. So that's the first pillar. The second pillar is PR. I've always really enjoyed PR. I really enjoy talking to the press. I find it kind of fun. There are all of these interesting stories to tell. I'm a frameworks thinker.

They like talking about the frameworks as well. And so it was something that I felt I could personally, naturally lean into. And superhuman is also a very mediogenic product. Email is a perennial evergreen topic. It comes around every five to ten years. It suddenly became hot again this year with the rise of products like hay from the and the base camp folks. And so it's one of these things where because email is something that all of us do,

a billion professionals do it for three hours a day, it in itself is very mediogenic in a way that perhaps some other enterprise software as a service companies might not be. And the third thing is content. We've done this not in an SEO-driven fashion. We haven't sort of tried to create a high-velocity content production house. The way that we do this is every year I pick a theme, and it's just one theme, This year it's been game design. Last year it was product market fit. And I write about how we do

that at Superhuman. But the way in which I write about it is to create a piece of evergreen content that I think will still be relevant five to ten years from now. They become sort of de facto how people do things. The products market fit framework that I outlined earlier, my VC friends tell me, is now actually the default way that founders are talking about whether or not they have product market fits. And to me, that's a sign of successful content. And it happens to use superhuman as an example, which is good for spreading awareness of superhuman. But really, the fundamental goal there is to let's create this piece of evergreen reference contents that's just going to be of tremendous value to this community over the next five to ten years.

When you were doing the last fundraise, what was the best question that a VC asked you? I'll tell you what the most common question was. And something where I was actually wrong and the VCs were right. The most common question was, because I was, because I was, because I was the most common question was, because I had this slide at the end of my deck that had us doing all kinds of cool things, last year, this year, next year, and it was the year after that said, and this is when we will integrate was Office 365. And literally every single investor that I spoke to was like, well, this seems ridiculous. Why wouldn't you just do that now? And 10x the size of your market overnight. And I said, well, because it's not going to happen overnight, it will take us about a year to build

that integration, but even so, I'd much rather continually make the product better than sort of divert engineering resource towards this activity that doesn't actually make the products any better, but it just makes it accessible to more people. And every single VC asked that question. Looking back now, I understand why they were asking the question, which of course is, you know, there's tremendous value to massively expanding by 10x your markets over a short period of time. And if you can do so, you probably should, especially if you can figure out how to do it without slowing down too much your product velocity. And so that's the strategy that we're pursuing right now is we're leveraging the series B money.

We're growing the engineering team. And we're going to build on Office 365 and we're working with Microsoft on this at the same time as continuing to build amazing features that our users love. One of the things that you guys do that I think you've become very famous for and is, again, counterintuitive, sort of like one of my favorite questions that Daniel Eck asked is, what's better than free? Gmail's free. You solved that problem. We talked about that already. But an additional thing that's interesting is that you, I think, still do manual onboarding of customers. That's a very strange thing for a single user software tool that I think in general

people could adopt an email client and be familiar with it. But you do onboarding calls, which strikes me as expensive, but also very interesting. I'd love to hear your thinking on why you did that and why you think it works for the business. I've seen a lot of companies, especially in our space, which I would broadly define as productivity or collaboration, get this very wrong. I no longer believe in the traditional launch. Let's say you've built a new email client or a new task manager or a new calendar app. The surface area for these products is absolutely massive. It's bigger than almost any other domain you could think of. And what that means is you also get a massive surface area for bugs, as well as massive variability and how users want to use the

product. Now, most companies would launch their app, and because the demand for these products is so high, they'd quickly get tens of thousands of users. But guess what? These users will find thousands of bugs, and that company would quickly get overwhelmed. They would not be able to fix the issues fast enough. And so these users will become disappointed, churn out the product, and then they'll tell everybody about their experience. And that is the very definition of a net detractor. So in my experience, it's significantly better to do what we do, which is to onboard customers at a measured pace each week.

That way you have the bandwidth to find any issues that they come across to fix them and to focus on making them exceptionally happy. And all of this said, there are three circumstances where it does make sense to consider a traditional launch. And that is when you need one of the three Cs, capital, candidates, and customers. If you need one or more of these, then maybe you should consider a launch in order to be top of mind for a period of time. But in the absence of needing those things, I would definitely do it the way that we've done it.

What do you think the impact is long term on the business model, which, again, software as a business model, as we've explored sort of ad nauseum over the last 10 years, is amazing because of the low marginal costs. How do you think about sort of the cost structure of a business like superhuman and how you establish sort of a great business and a competitive business growing towards that billion dollar outcome or beyond? This, as you can imagine, was also a conversation and a question that came up with basically every single investor that we spoke with. And I think everyone approached it with curiosity, but also with a little bit of a bias, which is surely you can't do this.

Surely you can't sustain this for a $30 per month product. And I showed them the spreadsheets and I proved that we have. actually can. And the reason why we can is because the calls are very efficient. It's what Jason Lemkin would call click to close. So remember, these aren't sales calls. These are customers who have been pre-sold. They come in via referral or via our website. They pre-authorize their credit card, then they schedule in for an onboarding. And we can then schedule these very efficiently. In fact, a typical week for our onboarding specialist looks like between 35 to 45 calls at capacity. And so when you do the math, 35 to 45 calls means that their sales efficiency, if you will,

actually ends up looking a little bit like that of an account executive in an enterprise software company. And so you end up with very similar units of economics. And in fact, for superhuman, it turns out that the cost to onboard a customer, when you take into consideration manager time, what we call customer requisition, you might call that a sales development rep or a business development rep. And the actual half an hour onboarding itself, it comes out to about $100 per onboarding. And that is actually less than what many companies spend on pure customer acquisition in terms of paid advertising. So all we've really done, and this was how I explained it, all we've really done is take the money that you might otherwise

spend on paid ads and instead spend it on having a phenomenal first 30 minutes with the product. Yeah, that's a fascinating idea. I love your frameworks way of thinking through things. What other major frameworks have we not yet talked about that you've applied productively? I think the biggest one, or the meatiest one, perhaps, is this notion of flow. And this goes back to the game design analogy, which is how do you design for flow? And it turns out that fortunately this has been something that has been heavily researched,

not only in terms of what flow is, but in how to create flow. And I also find that most product designers don't really study this. So I think we all have a basic understanding of what flow is, an intuitive understanding. You might say that your heads down or you're in the zone, those of us who play musical instruments or who practice a sport, will find that we very easily get into it via those activities. And it has been the subject of this intense academic study, and it turns out that flow has a very specific definition.

So it is technically a psychological state of mind that has six sub-components. Number one, it's the intense and focused concentration on the present. Number two, it is so absorbing that we don't think about the future and we don't worry about the past. Number three, it is so demanding that we don't care what others think about us. Number four, it is so easy that we always know what to do next. Number five, it is so powerful that it alters our subjective experience of time. time can either flash by in an instant or stretch out forever.

And number six, it is so rewarding that the activity becomes intrinsically motivating. And some folks will know that there's intrinsic motivation, extranic motivation, and intrinsic motivation is significantly more powerful than external rewards. So when you get into flow, you have this intense concentration, you don't really pay attention to your surroundings, even your experience of time. sort of blending and warping, and you're intrinsically enjoying what you're doing so much that you actually end up doing your life's best work when you're in flow. Now, how do we help people get there?

Well, it turns out that there are five preconditions, and it's the last one that most product builders don't understand. So let's watch out for it. Number one, we must always know what to do next. Number two, we must always know how to do it. Number three, we must be free from distractions. number four, we must get clear and immediate feedback. And number five, and this is the weirdest one,

we must feel a balance between challenge and skill. And it's actually more subtle than that. We must feel a balance between perceived challenge and perceived skill. If we perceive the activity that we're doing to be too hard, the emotion we actually feel is anxiety. If we perceive the activity we're doing to be too easy, we risk feeling bored, or even apathetic.

And as counterintuitive, as this may sound, this often means making your product more challenging to use. And we deliberately do this at superhuman. Superhuman massively increases the email skill level for everybody. But what if your email wasn't that challenging in the first place? Or what if you were already highly skilled when you came to us? If we don't do anything else, the experience will be too easy. and you would get bored.

Imagine a video game that was just trivial all the way through. Well, then, and this sounds crazy, we increase the challenge level. And so we provide a challenging goal. Hit inbox zero, but do it without ever touching your mouse. Do it with only the keyboard and the keyboard shortcuts and superhuman command and all of the other amazing things that we've built to enable you to do this, where you're going to learn a new skill, and in doing so, you'll unlock a new level of mastery. And you'll hit inbox zero more than you've ever hit it before,

and you'll save hours per week. This now balances perceived challenge with perceived skill and helps get all of our users into a state of flow. I love that. What a cool and somewhat counterintuitive thing to build into a product, make it harder or more challenging. I think that's really neat. You at the very beginning talked a bit about the sort of beautiful imagery

that comes when you hit one of the main goals in superhuman, which is in Box Zero. Talk to me a bit about your design philosophy. It seems like something that pervades the product, maybe pervades some of your thinking as well. What does design mean to you in a product? There are quite a few different things that are part of what we call our joy formula for products and design for engineering, but I'll answer it just with the lens of products and design. Number one is 10x execution. And this is actually what Apple does. So I'll explain it first by

analogy. Apple was not the first company to come up with face ID. Apple was not the first company to come up with touch ID. I believe in both cases, this was actually Samsung that had it in their flagship phones. Yet, they were the first company to execute it to a 10x level to make that experience feel joyfully exquisite. You could argue that Tesla does the same thing with electric cars. They weren't the first one, but they're the first to do it at the level where they do it. Now, we do that with productivity. We do that with email. Superhuman is not the first company to let you set a reminder or to snooze an email. But the way that we do it is at that level.

It is at that 10x level. We are the first company to let you do it without ever touching the mouse. We are the first company to let you do it whilst indulging playful exploration like we went through earlier. We are the first company to do it by typing in just a few characters of what you mean,

like 2D, and we automatically know that means two days, or you can even type in things like Q4 or in a fortnight or Friday at noon, and we know what all of that means. We are the first company to do it where you can type in time zones. Like, I want to get this back at 10 a.m. in Tokyo time. I want this to arrive in my customers' inbox at 9 a.m. Eastern time. And it's that level of execution. It's taking any given feature 10 times farther than anyone else would take it.

That is the first pillar of our products and design playbook. The second is to be blazingly fast. Now, when Paul Buhit, who was the employee at Google, who created Gmail, sat down to build Gmail, he had this rule. It was the 100 millisecond rule. The idea that every interaction should take place in 100 milliseconds or less. Why? Because that's when things begin to feel instantaneous.

Now, long story short, Gmail is unfortunately no longer like that. Many actions can take a second, opening an email can take a second, searches can take many seconds. So we've taken this rule and pushed it to the next. level. We've created a 50 millisecond rule. We want to be twice as fast as the original Gmail experience. Third is keyboard over mouse. We have this philosophy that for most things, it's not everything, but for most things, the keyboard is faster than the mouse. And you will know any number of sort of financial analysts or people who work in spreadsheets all day or people who work in the military even, who work in intelligence. The first thing that you do, or the first thing that

happens to you when you join an intelligence core or when you join any kind of financial institution is they rip out the mouse and they're like, you are going to learn how to drive this dashboarding tool or Excel or this database tool or this query tool with only the keyboard. And the reason is that's when you have billions of dollars at stake or people's lives at stake, speed truly matters. Well, I have the philosophy that speed truly matters for everybody. For us, the most precious thing that we have is our time, and so it's our mission to teach people how to operate at that kind of level. Another would be full screen is focused, as opposed to trying to multitask by default. In Gmail, when you hit C, and you get that little tiny compose window, you are multitasking

by default. And so when a new email comes in, you are more than likely to be distracted away from the email that you're actually trying to write. And superhuman when you hit C, when you compose an email, it's a full screen experience. It is not possible for an email. It is not possible for a new email to distract you. We believe in visually minimal, yet surprisingly powerful. A number of buttons that has been on the superhuman screen when you're looking at an email has been three, and it has been three for the last five years. How many products can make that claim?

I think probably none. And the reason why we can is we have this paradigm called superhuman command. Basically, you hit Command K, and it pops up this. beautiful command line interface sort of styles to evoke retro command line interfaces like thus, where you just type in a few characters of what you want. And it's actually super easy to use. You don't have to remember command line syntax or anything. You just type in a few characters of the idea that you have, and it will automatically do it for you. This allows us to put no buttons on the screen and to prevent feature creep from ruining our product, which does

actually happen to most products over time. We believe in exquisitely crafted detail. So, for example, there is this notion in typography of baseline rhythm, where you take your page, let's say your type setting a magazine, you would lay out perhaps every four millimeters align across the page. And you would want the baseline of your text, whether it's big or small, heading or body to align to this. You'd want your graphical images to align to this. You'll want all your flourishes to align to this. And this is part of the secret of making a... a magazine feel like a magazine. It's how things feel premium and high end. And historically, this has been nearly impossible to do on web design because font metrics are hard, because

every browser renders fonts differently, because very few people understand how font metrics work, because you have graphical elements, because CSS is a nightmare. What Conrad, our CTO and I did in the early days of superhuman is reverse engineer, the Chrome font engine, and built our own layout framework in CSS to automatically snap any piece of text, no matter the font, no matter the size, any graphical elements, to a four-pixel grid, which is part of what gives superhuman its airy, beautiful magazine layout feel, which also supports the premium positioning that we talked out earlier. So that's a section of our product and design framework, our playbook. I insist that this is written up into every single product spec that we do, just so that as we

scale the company, and I'm less involved in the details, we're still carrying forward this torch of what we believe in. If I were to go poll all the people that have worked closely with you at Superhuman or even before at LinkedIn and prior to that, and maybe all the investors that know you well, and ask them all what your personal superpowers were, what do you think the most common answers would be? I think the most common answers would be a few different things. So I've had a few close friends who have been founders tell me, and this is what my current two co-founders tell me, that one of the reasons they were most excited for working with me and why they said yes to working with me is that I have exhibited shockingly high levels, apparently, of empathy, especially for our customers, than they have ever come across. And so previous CEOs or previous people that they've worked with weren't able to dial up the empathy for customers to the ability that I do. But apparently, again, this is just what they've told me.

The interesting nuance is I can dial it down in an instant. There are definitely occasions when you need to be able to dial it down because for folks who have shoppingly high empathy, we'll know it's crippling. And actually, this is something that I've spent a lot of time exploring with my therapist. So I'm a huge believer in therapy and executive coaching. I work with one of each. And I've been exploring this idea of empathy with my therapist for quite some time. And she started breaking it down for me, explaining that there are two types of empathy.

There's the type of empathy where you can't help but feel what the person is feeling. And that's actually closer to sympathy. And there's the kind of empathy where you sort of intellectually understand it, but you don't necessarily feel the thing. Now, I actually exhibit sympathy more often than empathy. And so when our users get upset, when our users feel joy, I'm literally there feeling it with them. And sometimes it's a little bit crippling. And so I've had to learn over the years to sort of dial that down in order to become a more effective CEO.

But I rely on the sympathy aspect to create good products. So I think that's what my co-founders would say. I think what my investors would say is simply the ability to be incredibly compelling. I was asking David Ullivich, who sits on my board along with Mark Andreessen from Adresen Horowitz, about advice on closing executives because we've just raised the series B. I haven't had much experience closing executives in the past. Reporters sold before this stage of company. And so I was saying, well, how do you do this?

He said, just be yourself. You're so naturally compelling. It's like you kind of had a little bit of the Steve Jobs reality distortion field. So just go and be yourself. So I think that's what our investors would say. You mentioned therapy there. I'm really curious both with that and I guess coaching too as a second version. Why you find that useful.

It's something that I don't know anything about. I've not done either really. I've seen people say that it's really effective. And I'm really just be most curious what you get out of it, why you find it valuable. I think it's because I'm a frameworks thinker. And I think that there is just something about my mind that works faster when I'm asked a question. And this has historically been the purpose of muses in all of history. Anyone who was sort of working at the forefront of creativity or even actually technology,

mathematics and science, they tended to have muses. People who they would just go to and say, well, I've been thinking about this, can I talk through this, here's my equation so far, or here's my poem, I don't like this line, what do you think about this line? And I'm obviously not doing that for my poetry or for my science, but I'm doing that for how I feel and why I feel that way with my therapist. And what I find is often she has the answers because she's a very acclaimed qualified therapist who has many clients, many of whom also have similar lives to what I lead. But also she's just saying, well, why do you feel that way

and what do you think? And simply asking the question is enough to kick the framework part of my mind into gear. And then I'm often shocked at what I'm able to say over the next few minutes and I'll often answer her questions by saying, well, 0.1.2, 0.3.4. And then I immediately start writing it down because I had no idea that that framework was lurking in the back of my mind. But it was. And all it took was a question to get it out. And then going forwards, I no longer have to go through the agony of not understanding why I feel the way I feel. I now have a new framework in my toolkit. I love that. You inadvertently just made me realize something about myself, which is that maybe the reason I haven't done it is because I'm the one

doing it, meaning almost all I do is ask questions. And I always am befuddled why anyone cares about that. But you help me understand now why it might be valuable to ask a lot of questions. We are really good muses. I love that. I love that. Before we go to a couple of closing questions, we didn't spend a whole lot of time talking about your activities as an investor. I know you're active here have invested in a lot of early stage companies. I would love to hear a bit about both your motivation for doing so. I get asked the question a lot about why I do so many different things. And I'm sure you get that question too. And so I'd love your answer to that, why you're interested in doing it, and then any kind of big thoughts on what's most interesting

in the technology landscape today from an investing standpoint? First of all was, why do I do this? So for me, the motivations are multiple. One of the most interesting is it genuinely makes me a better founder. It is exciting to invest in a disparate variety of founders. Most of the fund activity is early stage. It's pre-seed and it's seed. The way that I help, those founders is actually mostly by giving back. It's by sharing all the frameworks and more that I've shared with you. It's by jumping in the trenches. It's by helping with crazy things that might be happening at the time. We had a portfolio company where one of the VCs literally just bailed on the company and said, we no longer want to be investors. And so Todd and I helped find another tier one

investor by their shares. And as you can imagine, that is trajectory changing for that founder and for that company. So it's sort of getting involved at the early stages like that, helping them design their onboarding programs, products, market fit, game design, the whole thing. I also do later stage investing. We typically do this to SPVs to date, and these are companies that many times are actually later stage than superhuman. So for example, I just invested in Koda in their series C. I just invested in class dojo. And these are both companies that are further down the road. And I look to Shia as a mentor and as a guru of sorts. I look to Sam similarly. I mean, they're just both such incredible founders. And I find it inspiring and motivating. And it drives me. After I reach through

their decks and I look what they're doing, I'm immediately filled with ideas for superhuman. And I go back to our team. And I'm like, guys, we've got to try this. We've got to do this thing. Or I really think we should give this channel a go or hire this type of person. I genuinely find it makes me a better founder. What has you most excited in the technology landscape? I think it's so cool to see things unfolding from the ground floor on. Any major trends that are notable to you that you would point out to the audience? That's interesting.

So we tend to invest across quite a broad variety of sectors. So the following trends are trends that we're really excited about. First of all is the trend that we call viral SaaS. So this is software as a service products that can inherently go viral. and they have the potential, like Elliot said, way back when, to become a massive consumer internet brand. Superhuman, I think, is an example of this, and we love investing in companies like that. Another is productivity and collaboration. You have things like Figma, Airtable, Notion, all great examples of this trend.

I think we're really in the early stages of that, so there'll be more to see there as well. You have things like creator tools, tools that help a next generation of creators build incredible things. I think that Andrew Mason's new company Descripts, which is honestly one of the most magical pieces of software I've ever seen when it comes to creating podcasts. There's a phenomenal example of that. You also have things like business infrastructure,

some of our most successful investments, as individual investors, I'm talking about investments from four or five years ago, where we're now 40 or 50X have been business infrastructure investments, companies like Clearbit or EasyPost, where the API companies often, they get integrated, they become part of the operating system of the company. And so therefore, almost impossible to rip out these are really exciting investments for us as well. And then we also love DTC brands.

So I mentioned House, which is the low alcohol by volume of Peres-Heaf. There's also magic minds that we invested in, which is building the world's first productivity drink. It's a shot of a sort of delicious honey, slightly matcha-favored drink that you take alongside your morning coffee. And as someone who has tried a large variety of new tropics, this is by far the best one. It doesn't require cycling. It's healthy. It's safe. And James Boshara, who was previously a very successful founder, has that same set of attributes that Helena has, just fundamentally understands how do you build a large-scale consumer internet brand and how DTC works.

So those are the areas that we get really excited about. As you think about superhuman, and I love thinking about companies in different acts, like an act structure like a play. Act one maybe is the time spent pre-launch building this, kind of your vision of what a better version of Gmail might be. Maybe Act 2 is the original success and fit with the market and refining that and expanding into office. I'd be curious how you would describe what you think Act 3 will be for Superhuman.

I'd say we're still in Act 2. I'm not quite done with the single player productivity aspects of superhuman. There's still plenty that we want to build. I measure it on a few key metrics. First is how fast people say they're going. And today we're saving people hours a week. They're getting through an inbox twice as fast as before. The other is the incidence of inbox zero, how much people can hit that.

So for example, we're now at the point. We actually just did this analysis where 36% of people hit inbox zero. in the onboarding itself, and more than half of all of our customers hits inbox zero within four hours as starting to use the product. I think these numbers are great, but I want to keep on pushing them, and there's a lot of amazing things that we have in mind that can drive those numbers. Act three of the company involves a few different things, and I can talk about two. So number one, I'm really bullish on writing assistance. So imagine waking up one day, and this is the most extreme version of this, but imagine waking up one day and perhaps all of your emails are written for you.

So instead of facing 100 emails that you have to get through, they're all actually pre-drafted. And all you have to do is come in and slightly tweak a few words here and there, which then trains the system so it gets better at writing your emails for you the next day, and then you hit send. And it may sound like science fiction, but I think we'll one day get there. I think another thing I'm really interested in is this interception between productivity and collaboration. And this was a very sort of counterintuitive decision that we took, where most of Silicon Valley was going after collaboration and multiplayer tools and team-oriented features, here's us. And we sort of weirdly said, no, we're going to build this single player thing that makes

individual people incredible at doing their individual email. And the reason that I did that was, I believed in building software that people wanted to use for themselves and choose for themselves, not because their teammates are forcing them to use it, not because their manager said, hey, we're standardizing on Jira over GitHub or whatever it happens to be. I really wanted to build a tool that people genuinely wanted to use.

And we've done that. And we've got a little bit more to do there on the productivity side, but I think what you'll see is over time we start to move towards collaboration. How do people work in emails together? Is it assigning and delegating tasks? Is it sharing their snippets?

Is it collaborating on drafts? emails together. And I think there's a lot of really interesting stuff to be done in that field as well. My closing question for everybody is to ask for the kindest thing that anyone's ever done for you. I've always actually struggled with the health of my back. This has been through to perhaps lifting poorly from time to time and definitely from sitting down for far too much of the day. And there was this occasion where it was shortly after a new year's where I'd managed to sprain my back and in a really, really bad way. I mean, I was literally sort of paralyzed on the floor,

and I couldn't really move my legs. I still sort of had upper body control so I could claw myself to my bed and so on. And my youngest cousin's sister was staying with me at the time, but she had to go and catch a plane, and she had to go and catch a plane to do an important thing all the way across America somewhere else. And instead, what she chose to do was cancel that appointment

and stay with me and get me all wrapped up and call 911 and get the ambulance people to my room, which was an ordeal by itself, because it was at the top of this building, and stay with me all the way through this entire ordeal, from being injected with these intense painkillers so they could actually bend me at the back and sort of put me in this wheelchair, so in the ambulance, through to the emergency room, and then I was actually in hospital for the next week or so, because I'd really sort of push my body right to the very limit. And I had to learn how to walk in. So I had to go through some degree of physical therapy. And it was sort of five steps at a time and 15 steps at the time.

Then let's actually try going up and down a staircase. And she was present for quite a lot of this journey. And it was a true act of kindness. So I would say it's that. Fantastic. Well, Rahul, I've so enjoyed this. Like I said, many times started the conversation. I just love people that have applied frameworks, not just theoretics, but actual hands-on application of helpful frameworks for building great businesses. You've shared. a ton of those with us today. Thank you so much for your thinking and for your time. Thank you for having me. This episode was brought to you by Microsoft for Startups. Microsoft for Startups is a global program dedicated to helping enterprise-ready B-to-B startups successfully scale their companies.

In our five-part mini-ser, we were talking to Evan Riser, CEO of Abnormal Security, about his experience with Microsoft for Startups. In this week's episode with Evan, we discussed the founding story of abnormal security, what it is, what they do, and how they got started. So Evan, I thought a great place to start would be just have you describe what exactly abnormal security does. Adormal security is a next generation email security platform. We use AI to protect enterprises against targeted social engineering attacks like supply chain compromise or fraud or business email compromise, which is the number one cybercrime in the world right now. So obviously a ton more just of the world has moved. Digital has moved to the cloud security.

Digital security has become ever more important. And I'm always interested in how companies like this get formed, like what the origin story was or the founding insight was. Can you describe the very earliest days and what led you to decide to start this business? So in 2018, when we started, there's probably a trillion dollars a year spent on IT. And that was probably 80% on premise. And you have to imagine that 10 years from now is going to be 80% in the cloud. And so there's going to be something like $600 billion a year of spend that kind of moves to like these new app, news cloud-based application. So that was like the first one, just enterprise movement in the cloud.

The second one is just the asymmetric impact that AI has had across industries. I think it's just a big gap between the promise of AI versus the impact that, you know, security and IT executives are seeing in their companies. If you contrasts a level sophistication of AI at Google versus the thousand IT startups that claims you AI, there's just a big delta there. So I felt like as more and more IT and security systems moving the cloud, there's a big opportunity for like a true AI company to take advantage that trend. And then the third thing, which is, I think, just a good reason for any company to

start is just customer demand. We talked to probably 50 Fortune 1,000 CIOs before we started. They said that email security generally and specifically business email compromise, which is their number one worry. And the fact that it was the number one cybercrime was kind of evidence that there's some sort of missing solution in the market. And then finally, maybe like the shift of enterprises into Microsoft 365 as a platform enabled all the APIs that ecosystem enabled a platform that, you know, could support these new technologies that take advantage of AI to help out enterprise IT and security teams. Can you maybe put some extra meat around the actual vulnerability here that you're helping companies protect against? You mentioned the demand. Like say a bit more about that demand. How

specifically what were there security issues that your product solves for these companies? So email security is very broad. There's a thousand different flavors and probably all of us have seen a couple examples of that. For the most part, there's great solutions in the market today for spam and phishing and malware. The trend we've seen in email security is the shift from these bulk attacks, these very personalized target attacks. And so the canonical example of a business email compromise attack would be someone impersonating a CFO or CEO a company, using that person's identity to trick someone inside the organization into paying an invoice by kind of leveraging that social relationship or the implicit trust and then using that to basically, you know, steal money

from the company. So that's kind of the most basic example and they get much more complicated. I understand I suspecting to have very sophisticated supply chain compromise where attackers are breaking into trusted suppliers, vendors, customers, you know, business partners, and using the real email accounts of those people, which may not be secure themselves. That's terrifying. I'm almost switching. I hadn't asked, but I'm glad that I did. What is the specific way in which you solve or address that problem? How does the product actually work? It's a cloud data solution. And so if you're a customer and you want to deploy our product,

you would basically go into your Microsoft App import. You click one click. That will install the product. It authorized us to access all these different APIs that power the product. we analyze the data. We basically build these behavioral models that understand how do businesses work, how do people communicate with, where does your supply chain look like? And then every time we see a new email, a new Microsoft Teams message, a new login, we'll analyze that against this kind of behavioral model, but we think normal behavior looks like. And when we detect an anomaly or something looks abnormal, we'll go flag that as an attack. And so I understand the normal behavior of business, we can detect these sophisticated social engineering attacks that typically bypass business process and

ultimately lead to bad things for companies. I'm curious how you thought about the early team. It seems like one of those products that you would have to spend quite a bit of time assembling before you went to market with it. So how did you think about that early team and what was important for it? I think when it comes to building a team, maybe a strategy in general, I think it's only important to know what does it take to win, where are unique strengths, and then what are the gaps? So for me personally, I'm a good recruiter and a good culture builder, but I'm kind of like pretty bad every other job function. And so, you know, I knew that the purpose this company was to go create a, you know, a multi-billion dollar enterprise company to go help our customers. And so when it came to

the team, I just tried to surround myself with, you know, the best people possible. And so I went to the person I thought was the number one enterprise investor who had seen multiple IPOs. I knew that the best in the world machine learning and AI came from ad tech companies. And so we hired machine learning leads from Google, Pinterest, Twitter, and a bunch of other companies, right, to make sure we had Silicon Valley's best machine learning team. I hired the CRO who ran sales, the number one email security solution today. I hired the head of product who built that solution. Generally, my strategy has been, you know, find the best people in the world. They understand the customer needs and can build, you know, innovative solutions that haven't seen before.

So basically you built the Avengers of Machine Learning from all the other places. Yeah, that was the goal. You have an unusual funding story, which you basically never hear, almost all the successful companies that you hear that they were turned down 100 times by 100 different VCs. I think you had a very different experience working with Greylock. Can you describe why you think it went so differently for you? Generally, most venture capitalists, right? In Greylock, probably in particular, they want to take advantage of these secular platform shifts. They want to invest in world class teams. They want to build the on big marquee companies that can transform industries. And so I think there's a couple things that gave them confidence. You know, generally, you know, security is a big market.

They saw it customers who really cared about this problem. And then I think the one thing that, you know, one question is going to ask is like, well, why now? Like, why didn't they just build this company two years ago. I think that the big trend is just, you know, people moving into the cloud office environment, in a particular, you know, the Microsoft platform. And I don't just mean as an email security stack, but the whole cloud office environment, it creates this new way of accessing data all through APIs. And so because of that, there's like the first time ever that a customer could go deploy this type of solution in a single click and then immediately get value without having to wait. And because these APIs give you, you know, both immediate access and

kind of retrospective access, but having to deploy a lot of. box in like your data center without having to like change around, you know, your mail routing. This was basically a new way of delivering this product to the market. And, you know, I think that fundamental shift in how enterprise using cloud offices, that basically created the opportunity for us to build a AI powered email security product that ultimately had better margins, faster sales cycles. And probably most importantly, it's just a more effective product for customers. To find more episodes or sign up for our weekly summary, visit investorfield guide.com. Thanks for listening to Foundersfield Guide.