This Week in Startups - How to come up with a startup idea (FounderU) + Ask an Angel with Zach Coelius | E1263

Episode Date: August 11, 2021

Jason does a Founder University segment on how to generate startup ideas (1:55), then Zach Coelius joins to take some "Ask an Angel" questions: what data points are most valuable when iterating on product (29:03), what skills are most important to be a success in VC (36:410), what skills are most important to be a success in VC (42:51).

Hey, everybody. I'm in Italy in the countryside on my family vacation, having a wonderful time. But before I left for Italy, I decided to record some Ask Jasons where I take questions with my friend, Zach Collius, who's an amazing investor in early stage startups. And I also decided to do a Founder University segment. These Founder University segments are part of Founder.comiversity, where we help founders learn how to start companies, grow companies, and just have a greater chance at winning. So the first segment you're going to hear is part of that founder.com. And I'm going to talk about how to come up with an idea for your startup. I get this question all the time.

We looked at all the different research out there and I took my ideas and we just made a framework for what idea should you do for your startup and then all these S.Jasons stick with us. and I'll see you with live news starting next week when I get back. This week in startups is brought to you by Bubble empowers people to design and launch their own apps, marketplaces, or tools without needing coding skills or pricey engineers. The first 500 listeners will get one month free on any of Bubbles paid plans from $29 a month up to $529 a month at bubble.io slash twist.

Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist and LinkedIn marketing. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash this week in startups. How do I come up with an idea for a startup? I get asked this every week of my life. How do I come up with a great idea for a startup? And there are many different theories about this.

Some people believe you should really do a bunch of user interviews and study customers and then back into an idea. Other people think you need to have the magical moment where you couldn't get a cab at the LeWeb conference. and Garrett Camp says to Travis, you know, there should be an app for this for ordering a cab and all of a sudden you get one. Or sometimes it happens through a pivot.

You start with one idea and then you see some need in another area and your first idea is not working and you learn something during that first idea and it informs the pivot and the next idea you come up with. So you don't have to come out with something out of thin air. I wrote a blog post back in 2015

is inventing something new necessary for startups. And it turns out most of the great startups of our time were evolutionary, not revolutionary. So let's look at a couple of them. Now, Google. There were a dozen search engines before Larry Page and Sergey Brin came up with the idea for Google and PageRank where the top couple of websites and who they linked to would inform how valid or important different websites were.

And long before that algorithm got going, people were doing full text indexes and people were gaming the system. And search results were, let's be honest, garbage. And there was Lycos and Magellan and, you know, Yahoo directory. There were tons of different ways to search for stuff. But Google wound up getting 90% of market share across the board in search on a global basis, with the exception of maybe four different places in the world. China, South Korea, Russia, small number of places, Taiwan, I think also Japan with Yahoo. So there were a very small number of places that actually beat Google, but they were not the first to do a search engine.

Obviously, they just built something that was 10 times better than anything that had come before it. And they had an incredible business model, which was whatever you typed in a search box, they created an auction for those. So it really was making a better mouse trap and then also having a better model for selling the mousetrap. There was a business model innovation combined with a product innovation or just a dramatically better product. Then you look at Facebook. Well, when Facebook came out, we had these big debates because MySpace and Friendster were incredible, but MySpace and Friendster kept crashing and nobody had ever seen virality in the marketplace before. Virality was a new concept that a website would become instantly, massively popular, and every

user who joined would bring 2.5 users or 1.8 users, and the thing would just grow like a wildfire. And databases and web tools and servers and caching didn't exist to the way it does today, and certainly cloud computing didn't exist. So MySpace and Frenster were constantly crashing under their own weight. And they were also, MySpace wasn't designed very well. So you had Facebook come along. They basically knocked off the idea. They had less features, but more stability.

And all they did was focus on growth. So Facebook built a better mouse trap because it was very simple. It stayed up and running. It was as simple as that. And there was nothing original about Facebook. In fact, almost everything they did, they copied those ideas. So it was simply executed at a much higher level. And they brought an innovation to it, which was MoveFest,

ass break things. In other words, it doesn't matter where the chips fall. Let them fall where they may. We don't care about people's privacy like other services do. We're going to allow you to add people to groups. We're going to allow you to upload your address book. We're going to do all these crazy things that other people might feel it might be a little unethical or a little too aggressive, Facebook did not have any problem with aggressively pursuing growth, even if it meant that people's privacy was compromised in any way. And that was a big part of their success was that they were marauding, and they were the fastest company to a trillion dollars. And to a certain extent, we're sitting here in their second decade, and they're kind of still doing it, aren't they?

They're just like, we're going to just copy Snapchat or Clubhouse or a substack and review. They'll just copy anything. And they'll copy it three or four times until they get it right. And they don't care. They don't feel bad about stealing your idea, nor do they feel bad about people's privacy getting compromised. They just want to grow. Apple, they did not invent the MP3 player. They did not invent the smartphone.

They did not invent the tablet, nor did they invent wireless headphones. All of those products were. in the market long before Apple entered those markets. Steve Jobs was just a complete visionary in terms of product design and simplicity and making things at the right time. There's always

this famous story. They brought him the iPad before the iPhone, but the large screen and the processing and the battery just wasn't ready for that task. The touchscreen was like a big new idea. In fact, people hated the concept of a touchscreen. Remember your BlackBerry, you couldn't touch

the screen, you had to use the keyboard. and he was like, no, you're going to use this keyboard on your touchscreen, and it was terrible at the start. But he knew that he had this vision that would make it so gorgeous, so easy to use, that it would have mass market appeal. And that really was his gift. Now you look at Tesla. They were not the first battery power car.

In fact, everybody had given up. But Elon found a really great idea. We're going to sell the first 100 cars for 150K, the roadsters, and I have number 16 in the driveway, not far from here. And what an amazing innovation. We're going to go after the highest end part of the market first. Most people would say, well, shouldn't you go for a very accessible car like a Prius? No, because these cars were super expensive to build.

The first battery packs were 30 or 40 grand from what I read online. And they were, you know, really bespoke in the beginning. And then Model S and then Model 3 and Model Y and the cyber truck, right? Just relentless innovation. but starting at the high end. Uber as well started on the high end and then worked their way down. There was taxi magic and a couple of other services before Uber.

And so those are just a couple of examples of companies that really took ideas that maybe other people gave up on, people gave up on electric vehicles, people gave up on touch screens and tablets. Obviously, Microsoft was very much involved in tablets. Bill Gates was all over tablet computing and the iPad that just turned out to be a better product. Over the past few years, everyone has been talking about no-code,

and one of the first no-code web app tools was Bubble. Bubble empowers people to design and launch their own apps, marketplaces, or tools without needing coding skills or pricey engineers. Bubble offers a digital editor and cloud-hosted platform for as low as $29 a month. Users can build pretty much any complex web app, from marketplaces to social networks to SaaS tools and more. Why is Bubble so great for founders? Because you can spend 10 times less on building out your MVP.

Bubble utilizes drag and drop elements in their visual editor so users can quickly and easily build powerful apps. Go from Idea to launchable product in a matter of days or weeks, not months. And they handle all the annoying stuff like deployment and hosting so you can focus on your product and customers. Bubble has over 1 million users worldwide and enables over 1 billion and business volume. Their founder and CEO, Emmanuel, was on episode 1021 back in January of 2020, so you can check that out if you want to learn more. And Bubble is offering one month free on any

of their paid plans, ranging from their personal plan of $29 a month to their production plan of $529 a month. But act fast because they're only offering this deal for the first 500 redemptions. Head to bubble.io slash twist and snag one of those 500 coupons. for when you're picking an idea, I would ask yourself, is there a product that you use or love or you used to love? It doesn't exist anymore,

but that you would like to see be 10 times better. There might be an opportunity to take something like hosting video on the web and making it better, which is exactly what YouTube did. There were many YouTube's before YouTube.

What matters is not ideas, but the people who have them. Good people can fix bad ideas, but good ideas can't save bad people. This is Paul Graham's famous saying, Paul Graham who founded Wycombinator. And he's so right. You know, ideas do not matter. Everybody has ideas all night long when they're sleeping. The ability to execute on the idea is the key piece to this. If you cannot execute, if you do not have skills, you're not going to win. And a person with skills who is dogged and relentless will

eventually pivot and figure things out. That's why investors always say we bet the jockey, not the horse or the race, because the jockey could trade horses or join a different race or, you know, iterate from there. Now, if you want to make something 10 times better or twice as good as something, that's kind of hard to do on one vector. But if you can make five things 20% better, or 10 things 10% better, or 20 things 5% better, you could actually improve an experience dramatically. Look at Virgin America, if you remember, the Great Airline. They did a lot of little things, to make everything more fun from they had a dancing,

commercial and singing when they did the boring safety speech at the beginning of your flight. They had mood lighting that was just easier on the eyes and they also sprayed some sort of fragrance in the plane and the flight attendants were optimized for being friendly and engaging.

There was just, you know, probably 10 or 20 things you could think about. They also had go-go Wi-Fi that they just did five or 10 or 15 percent better, and in totality, it made a new experience. Now, you might also have something that you are passionate about, and you have a moment where you say, my God, there's got to be a better way. And you can pursue that. Now, if you pursue that, you could be, since you're making it for yourself, very knowledgeable about what you want. So if I make a podcast about startups and I'm a startup

investor and a founder, I know what people want to talk about on this startup. if you love pizza and you make a pizzeria and you have the thesis about what makes for great pizza and one of those is that you get the pizza on your table out of the oven within a minute and you say that's 800 degrees you know there's a chain called 800 degrees I think in L.A. that we used to love going to because you would make your custom pizza

you walk down the line and they put in the oven it comes right out. Boom, totally fresh, all great experience and great ingredients as opposed to going to a pizzeria where the who knows how long the pizza has been sitting at the line. right? You have some idea, some thesis, you test it. And because you are customer zero, well, you don't really need to ask any customers what they want because you know better. The problem is, what if you're not customer zero, your customer one of one, or you're one of a hundred. So you have to be careful that you don't make something that only appeals to a small number of

people, but you also don't want to build something for everybody because then it appeals to nobody. And that's what Tesla did with the Roadster. It appealed to people who were, sports car, aficionados, technologist, and people cared about the environment, who had discretionary money to spend and wanted to be part of the Green Revolution. The Model S was a similar extension of that,

but for people who liked, you know, driving in, you know, BMWs or Mercedes and wanted a more refined experience, and then the cyber truck and the Model Y, you know, all different groups of people who might want something slightly different from a car. There's another argument in startup world, you know, should you go after something

that's your passion or not? It turns out, you know, some of the great businesses in the world were passion-based businesses. Bill Gates wanted to put a computer in every home, and Steve Jobs wanted to make computers super easy to use so anybody could just start using them intuitively. And Elon wanted to get everybody off of fossil fuels and save the planet from global warming by basically getting rid of the ice engine, the internal combustion engine. all kinds of different motivations for people that give them the drive to go to work every day. But then you have somebody like Jeff Bezos who looked and had like, I believe, 20 or 30 different ideas. And he was like, you know, the idea of selling books online is such an important idea. And nobody's done it.

And there are this many books in the world. And it's this market-sized opportunity. If we get books, then maybe we get CDs. If we get CDs, maybe we get DVDs, you get the idea. Also, you know, what is in your skill set? So there's what the world needs. there's what you're passionate about and then there's what your skills

are capable of doing so if you're an engineer like Elon is and your passion is you know getting people off of getting humans off of fossil fuels well boy you know being an engineer certainly helps and the world wants that product

and you're passionate about it my goodness it makes it a lot easier to go to work every day sometimes I'll see people who are starting a company and they're doing it just to make money and they have scales and then you know what that happens, they quit because most days suck as a founder. Most days running your company are brutal and hard. And then you have, sometimes you get escape velocity and everything starts going well and

then only every other day is hard. And then eventually you might have four great days for every hard day or you might have a brutal day every 20 days. And, you know, that's one of the nice things about startups is you could change the world and things get easier as you go sometimes. Other times the complexity and the competition. are brutal as well. So the other way to come up with ideas

that some people look at is the question of why now. Why will this technology work now is what investors will ask founders when they bring them their startups. Why will this product work now? Well, the why now for a company like Uber was GPS and mobile phones and payment services. If you didn't have GPS on your phone,

you couldn't see the taxi coming to you, and the taxi wouldn't know where you were, and you couldn't connect each other. So there was an SMS thing called Taxi Magic, where you could text somebody your address, and then they would come get you, and it was fraught with problems, etc. It was GPS, the smartphone that enabled that product. Instagram. What enabled Instagram? Well, obviously, the cameras on phones became cheaper and cheaper and cheaper, and they had internet connectivity. Before that, when you use Flickr, you had to

take pictures with your digital camera, take out the memory card, and upload them to the internet. It was arduous and painful. And at the same time, the smartphone came out with a better and better camera, better and better GPU, so you could do filters. If you couldn't do filters, people probably wouldn't have been as enamored with Instagram as they were. And you couldn't do the filters on Instagram long before Instagram had them. You'd just have to use a $400 piece of software called Photoshop, and you'd have to learn how to do all these crazy 20 steps. It was the advancements of GPUs and software and the camera quality on your phone, combined with people understanding what social networking was.

All of those whys led to this incredible reason of why Instagram became so popular. Let's look at another company. Why did YouTube work? Well, cloud computing emerged right as YouTube was starting their company. And same thing with Dropbox. And storage was plummeting in cost. and there were places where you could rent storage online and data centers where they would manage the storage for you. And then YouTube realized, well, instead of charging people to upload their videos, what if we made it free?

What would happen? Before that, you had to buy a server or buy a certain amount of server space to upload your video. And if your video got watched by a lot of people, then you got a bill for $10,000 because so many people watched your video. And in the early days of the internet, in the 90s, a video would go viral and all of a sudden would say, this person has not paid their server bill or they reached their cap, you can no longer watch this video. I kid you not. But then through the dot-com era, we built so much fiber and so much infrastructure that bandwidth

plummeted to a penny or two on the dollar of what it previously cost, and storage went down 95% at the same time. And the YouTube team was the first team to realize that. They realized if this is getting cheaper. and cheaper to the point at which the views and the cost of those views and the cost of the storage would be less than the money we'd make from advertising. Holy cow, we could let anybody upload anything and put ads in front of it and never ask them for their credit card. Mind blowing. So the why now, ask yourself, what new technologies have come out or what technologies have

plummeted in price? So if you were to look at things in your smartphone like Excel and and cameras and processors, they're all getting so cheap that you can do something really brilliant, like create a camera that has AI storage and a processor in it that's able to do facial recognition in the camera itself, right? And then that could open the door without ever going up to the server and without having an internet connection. It could just, you can program your face into it, you walk up to your front door, you can open it. So ring doorbells, could have enough technology in them today to send a video back to you on your mobile phone. If it wasn't for a decade and billions of smartphones being made, a company like Ring could not exist. Their why now was how

the sensors and cameras and internet connectivity and Wi-Fi chips were in those. So don't give yourself too much credit for the idea. There are good ideas, but an idea is not a company. And what you really want to do is iterate and iterate and iterate on the problem you're trying to solve and just be humble about the fact that nobody invest in ideas or plans today. I haven't seen somebody raise money just based on an idea or a plan in like well over 10 years. What people are looking for is track records from founders and teams, world-class products that you were able to build on a small amount of money and growing startups. That's where funding occurs today. You could have a very boring business, but if it's growing 30 or 40% every month, you'll have money thrown at you.

And if you're begging folks to hear about your idea, you're doing it wrong. Don't worry about your idea. Worry about your MVP, your minimum viable product, your prototype. Your prototype, your MVP, the first iteration of your product is more valuable than a thousand pages of business plan and 500 pages of mockups. Because we now know as investors, when you show us that prototype, that you care enough to have built it. And that you have the credibility to write code, do the design, and make this a reality. And then the next stop is to have but 10 people using the product every day and loving it. If you do those two things, you make a product that's great looking and solves a real problem for 10 people, you're going to get meetings with investors.

If you try to get meetings with investors before you do that, it's probably not going to happen. So that is the test that you're being challenged with right now by investors. Are you naive and clueless and believe that people should take the meeting with you because of your idea or your business plan? That means you're out of sync with reality and that you don't understand that there's thousands of people who just build things in the world on indie hackers or pioneer labs or, you know, in weekend hackathons. People are out there building prototypes all the time and getting 10 customers.

to play with them. And those are the people getting the meetings. And you're trying to get a meeting and asking somebody to think about your idea or hear about your idea. Nobody cares. People are too busy. There's too much competition in the world for you. Get focused on building and get focused on. Hey, everybody. I thought I would have Christina Casiofo on this week in startups to tell you about Vanta. Vanta, of course, has been sponsoring the pod and had a great reaction. I'm going to talk today just a little bit about what SOC2 compliance is and why it's so important for SaaS products. Welcome to the pod. Christina.

Thank you so much for having me. How long does this typically take and what does it cost? Yeah. So in the prior world, if you didn't use software like Vanta, often companies would take about a year on the project to figure out what they needed to do, get everything in order, work with the auditor, get the auditor what they needed to get their report. And they probably spent $20,000 on the low end, kind of can go up to hundreds of thousands dollars depending on how large you are you figured out a way at vanta to do this quicker better and cheaper

so what is the secret and how can people use the product yeah absolutely so secret is sort of like a lot of things you turn you turn a lot of this into software so you write a standardized set of checks that a company needs to do you base them on good security principles and then you just monitor an alert all that those things so the company gets a dashboard they always know where they are they're not you know, mucking around in spreadsheets. And the auditor gets just really detailed data so they can be sure that what the company says they're doing is actually happening. All right. Fantastic. Well, thanks so much for coming on and telling the audience why you should get your sock too, when you should get it, and how you should do it. And you've been very nice to our audience, giving them a thousand dollars off,

which is a really significant and generous offer. Go to vanta.com.com slash twist. V-A-N-T-A-com to get $1,000 off your sock, too. Thanks, Christina. Appreciate it. Thank you so much. a couple of questions just to wrap up here that you need to be able to answer. Are you able to solve this problem that you've identified? Like, do you have the expertise? Does your team have that expertise? Do you understand the problem well enough? If you don't have the expertise, you're going to need to get it. If you don't have the knowledge, you're going to have to do user interviews. So I don't want to dissuade you from day one. You don't know how to build

a Peloton-like product or a tonal-like product. Okay, you're not an engineer. You're never built software. Okay, I don't want to dissuade you. But you should have to ask yourself, like, what is your experience? Have you gone to a bunch of classes for spin classes and used bikes and how familiar are you with the existed connected software out there? You get the idea. And making hardware, maybe you should go work at a startup that is doing hardware or you should go work at, you know, a spin class and teach spin for six months and really understand the customer base so that informs what you build in the product. So, number of Number one, why will you be the person uniquely qualified to solve this problem?

It doesn't mean you have to have spent 10 years in writing, you don't have to spend 10 years in the hotel business to create Airbnb. You don't have to spend 20 years owning a taxi company to create Uber. In fact, some people would argue fresh eyes on the problem or better, but you should have some expertise on building the product and really understand the customers. Why now? It's the second question you're going to answer. Why now?

Why should this product exist now? Is there some technology enabling it? three, how big is the market? Always an important question. Is this for 10 people, 100 people, 1,000 people? Do that bottoms up, bottoms up market sizing. Okay, there's 1,000 people who have the title social media manager at major companies and who have 10 people who are more working for them.

We've identified those 1,000 on LinkedIn. We're going to pursue them. And we think those 1,000 will turn into 10,000, we'll turn into 100,000. We'll turn into a million people with the job title, social media manager. Okay, great. and we actually did how to get your total addressable market on Twist Episode 1211. So if you want to go deep dive into Total Addressable Market, just type in This Week and Startups Episode 1211 into your Google browser.

And most importantly, how are you going to make money? What's the business model? The business models tend to be pretty straightforward in our industry. You're a marketplace. You take a percentage of the commerce done on the marketplace, like eBay, like Coinbase, like Airbnb. Or you're selling a software product and you're getting a monthly fee like Com

sells a software product to consumers or Slack sells a software product to enterprises. Finally, you're going to want to be able to interview those potential customers and gather feedback, listening labs, user interviews. This is a whole science to this. You can look it up online. You can learn those best practices.

It's not really difficult. You basically go talk to somebody and you ask them probing questions or ask them to show you how they do things at work. And then you write that information down in your interview. Sometimes you record it with a video camera or with audio. And then if you've done 10 of them, you might find that six people, seven people all have the same problem. Billing.

You know, so you talk to people who are running Airbnbs or running bed and breakfast and they say all of them have the problem of finding customers, acquiring new customers. Maybe they have billing problems. Maybe they have insurance problems. you know, who knows what they're building their website might be a problem. So you solve all those problems with an Airbnb website. And be objective with yourself.

You want to understand why this might work, why it wouldn't work, and you want to be just kind of candid with what you're capable of doing and what talent you're going to need to bring to the table. So get building that MVP. Remember, startups are not for everybody. 90% of them fail, but there is no success like failure. If you fail, you learn. Keep failing, keep learning.

keep trying. If 60, 70, 80% of startups fail, you just do three or four of them. You're going to get a win. That's my basic math in all of this. You're going to get a win eventually and you're going to have a heck of a fun time doing it if you're the right type of person who likes to work hard and create in the world. And what are your choices? Like, are you going to go work for some big giant company and work for Google now, optimizing or Facebook ads? You know, maybe if you need to make a little money and buy your house, pay for a kid's school. But after that, be a little delusional and start a company. Zach Collius is with us again.

Here we go. Mohamed asks a live question here. Can you share a few insights on what data points you consider the most valuable while iterating on product? This is a great question, and it obviously varies by the type of product. So let's go with a SaaS product first, and then we'll go to a consumer product. Yeah, so the way I like to think about it is you can kind of break it down into three sort of categories.

The first category is very qualitative, but it's about the value that you deliver to your customers. And it's about crystallizing the articulation of that value in a way where you can say, this is what we do that our customers love. And then I can ask your customers and they say, this is what we love. And those two things are the same thing, which sometimes they're not. But that's really, really the secret is that the customer's like, oh, this is what I push a button and a car shows up my door. That's fucking awesome. Or, you know, I can put up my screenshots and I can work with them really easily. And it's the best app in the world for doing that. The second sort of category that we have is sort of the metrics of your business. And those are really simple,

straightforward, and you can go deep dive into SaaS metrics. And at the end of the day, it's how much does it cost to acquire a customer? How much do they pay you? How much do they use your product? How long do they stick around? And once we have those numbers, we can understand where the business is going to go relative to, you know, pretty close, like down to individual decimal points. I mean, we have people in the industry who specialize in doing late stage SaaS funding and they do all kinds of formulas and they will understand your business and customer base. I mean, Chamoth was doing this at Social Capital.

Sacks is doing it at Kraft. There were other people who specialized in SaaS where they started coming up with their own formulas. How much money did you spend this year on your sales team versus your net new ARR? They're just figuring out all these kind of things. I'll talk a little bit about a ratio that really matters depending on the product, which is how many monthly active users do you have? Okay, great. We now know, let's just pick a number. You have a million people a month who use your product.

Okay, now, what percentage of the daily, what's the daily active user to monthly active user? In other words, you know, are people coming once a month to check their bill or to use the product to, you know, watch one TV show or something? Or are they on Snapchat or TikTok every night for four hours? How many sessions are they opening up? So those ratios in a consumer product become really interesting to understand exactly how sticky is a term people used to use, but just the level of engagement. A fancy term. Engagement is a fancy term. Stickiness is a fancy term for the number of minutes, how often people use your product.

And you can do all kinds of interesting ratios. And if people use your product more, that generally indicates product market fit. They're getting delighted because people are so busy that to get the product. their attention is a big win. So if you were calm, the meditation app and people were using three times a month, the chances of them churning down the road would be less than if somebody used it three times a year. And if they used it three times a week, maybe that person churns less. So that's where getting users to use your product more helps. What's an example of how somebody could increase usage of a product? Well, streaks. There's a thing. You've done this many days

in a row of fasting in your fasting app, of working out on your Peloton, of sending a message to another person in Snapchat or doing meditations in Com. So just doing something as simple as that. Stupid feature, you know, you're on a five-day streak, you're on a seven-day streak, could greatly increase the engagement. And that's a sign of strength. Those are but some of the important metrics. And then you will create metrics inside your company to motivate your team. And boy, just be careful with incentives because if you motivate your team on daily active users too much, then they might do things to goose that number that are unnatural.

So you don't want to have unnatural acts like firing off too many notifications because then people will turn off notifications because you're being too annoying. So make sure you're not, you don't motivate your team too much and put them on tilt to do something unnatural, I think is important. Yeah, right on. Do we miss anything there at metrics? I mean, there's the whole world, right? Yeah.

But I mean, building out of from there, we talked about consumer, we talked about SaaS. Did I miss any? Is there anything missing there? I mean, growth. I mean, I think one of the things that you always have to come back to the sort of third category in my book is growth and understanding growth across your cohorts of users and across your channels and down to the, down as incremental as you can possibly get is a critical, critical part of any business because you,

if you ain't growing, you'd be dead. Basically, our industry is about growth. If you can't grow, VCs might take a meeting with you because a friend begged them to or, you know, whatever. But if you are growing, conversely, you email any VC, any angel, any seed fund, and you're growing 20% or more for three months or more, you're getting a meeting. Let me say that one more time. If you're growing 20% or more for three or more months, that means you doubled your business in but three to four months, right? The rule of 72.

Divide a time period, divide a growth rate into the number 72. That's the time period. If you're growing 25% a week, that means every three weeks you're doubling. If you're going 25% a year, every three years to doubling, if you're going 25% a month, every three months you're doubling. If you can show you're doubling every three to six months, you're going to get a meeting. And it really is that simple. It doesn't matter how.

ugly your deck are, it is, how ugly you are, how ugly your clothes are, you got a big pasta saint. I mean, if you showed up with a pasta stain and spaghetti down your white pressed shirt and you look like a hobo, and you got 30% month over month ground for three or four months in this town, you're getting the meeting. And you're probably getting the check. Here's the check. Here's the check. Don't knock over their grandmother to get you the check before another VC. right now lincoln is going to give you a hundred dollar credit towards your first ad campaign i'm telling you the call to action up front so good lincoln dot com slash this week in startups to get that hundred dollar credit towards your first ad campaign if you want to get a group of people

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Now that you're looking back on it with almost a decade of experience and certainly multi-decade being on both sides of the table, what do you think are the skills to become successful in VC? Hmm. I mean, to go back to what we started the conversation on, the most important thing in this business is deal flow. If you have access to the deal flow, you're, you're, you're, you're going to go back to what we're going to be in a great spot. And if you don't, it's going to be really challenging. And deal flow

comes back to the value that you've delivered to the community. If people think you're useful, they send you deals. And so you really, the most important skill you have to learn is how do you actually deliver scalable, leverage value into the community in a way that people appreciate and they want more of. So like, I want more of that. How do I get that guy involved in my business? And it's a non-trivial thing to pull off, but it's the most important thing is to get access. to deal flow. And if you look at the precursors to deal flow, reputation is one,

and there are ways to get additional deal flow. Like if you email other VCs and you build a good relationship with them and other investors and you say, hey, here's a company I'm investing in, would you like to meet them, there's still room in the round? That simple act, people will reciprocate over time and they will include you in rounds because of the reciprocity effect. You can look up the reciprocity effect. It is a very simple concept.

You do something, you do, if somebody does something for you, you are more likely to do something for them. If you do, if somebody asks you to do something for free to them, you're going to feel much more connected to them. So don't be afraid to help other people out or ask for help and be of service. Great question. The only thing I can think there is to be a level-headed, calming, stabilizing force in our industry because our industry is so chaotic already that when, you know, you're going to have crazy moments come up and be acting hysterical or getting freaked out or adding gasoline to a fire is not the job of the VC. The VC's job is to come in

and be a fixer and you want to be calm and fix problems, not cause problems. And we've both been in situations, Zach, where our peers are causing chaos. And now you're trying to solve a business problem and solve a bad VC problem. That's brutal. That's good. I mean, I have had people on boards just causing all kinds of problems.

I much prefer a neutral investor who doesn't provide any downside. And, you know, maybe there's light upside, but the check cashed. That is wonderful to just have somebody who put money in, and was not a distraction and was just patient capital. If you're just patient capital, you're beating out like a third of the market, which is the annoying capital.

I'd say a full one third of the market is annoying capital. At least. At least. Maybe it's half. Yeah. So it's probably like 25% of VCs are actually really helpful. 25% are kind of neutral. They don't harm the business.

They might not be super helpful, but they're certainly not hurting it. And then there's half that are just causing chaos with bad advice. or like, what is the advice that we give now, Zach, that we learned 10 or 20 years ago that's valid? How much of it is valid? You know, like half? And who knows? Like, I think sometimes people would be better off asking questions than giving advice. I've found myself, I just asked questions.

So what's the problem? Great. What's your plan to solve the problem? How confident are you in that plan? Are there things that you're worried about with your plan? Okay. Is there anything I can help with that problem? plan and did you think about these three things because I just read your plan? I mean, that's

literally the approach I've been taking. Now, that's not the approach I take when I'm running my company when I have to be the leader. But when I'm the investor of the board, I just want to ask probing questions and have a positive dialogue. And that's taking me a real change in my personality, you know, from being a leader to being an inquisitive person who is a coach. You have to adjust from being a CEO to being like an investor and asking questions versus as like being a, you know, a general. Yeah, absolutely. I mean, as soon as you become an investor,

you are no longer in charge of anything. The only thing you're in charge of is whether or not you write the check. But before that, you're in charge of nothing. Like, your ability to write the check, you're not in charge of that. And you make the decision, and then you hope you actually get to write it. And then after you've written it, you're in charge of nothing.

It's so true. It's so true. I mean, you literally are a passenger, you know, or you're maybe you're down in the tower like an air traffic controller, but you're not in the cockpit unless you're invited into the cockpit, and you may be invited into the cockpit for five minutes,

but they don't want you there for the whole ride. Yeah, even then, like, if they invite me into the cockpit, that the pilot is flying the plane, and the last thing they need is somebody talking into their ear. The only thing I'm going to do is the pilot turns around and asks me a question, and they're like, hey, what about this?

I'll be like, well, here's what I think, but you're the pilot, and you're the one who can feel the controls, you can feel the engines, you can you can you're you're you're you got your hands on the metal and I'm just back here you know and they might say hey Zach you've landed in this airport before I've never landed in telluride oh yeah what's coming up here yeah sure and you're like yeah you know this is a sloped runway and there's crosswinds and it's a short runway and here's how I approached it

I'm hoping that helps you please don't flip the fucking plane because I'm on it yeah but let me help you get talked to some people who've done it before who are real pros like yeah or here's some let's think about how do we bring in professionals into the problem, but yeah. Or if we can't make it to that airport, by the way, here are two other airports we might be able to land. I don't know if you ever been to Durango, but, you know, I had to land there one time. So you can kind of give them some help and be a guide on the side, but you are not at the controls. From Aaron, is it worth working as a product manager for a startup before becoming a first-time founders act?

Absolutely. I mean, look, this is a business. This is a business about getting exposure to growth. And the earlier, like, you know, that famous line that what Cheryl was given when she was thinking about whether or not she should join Facebook. And I think it was Bill Campbell basically said, if someone offers you a seat on a rocket ship, don't ask what your seat is. Just get on. And if you can get on any sort of growing business, you're going to learn so much. And at some point, the learning will decrease. And then you can either decide to jump into another one or you can.

can start your own thing. But let me tell you, the brutality of starting a business is, is unbelievably hard. And if you can learn that on somebody else's dime, at somebody else's guidance and apprenticeship, like, highly highly recommend it. And then think about the credibility you have. Oh, I was at Facebook during this period of time, i.e. Chamath. Chimoth was a nobody in the industry. He worked at what Mayfield. And then before that, he was at AOL doing ICQ. And then working before that with Dave Samuel on spinner or whatever that was. He literally had a meandering career to his own admission. And then this rocket ship shows up and he gets on the rocket ship and he grows it from

four million to 400 million. You can never take that away from Chumath. He watched that happen. And he hired the team that was responsible for growth. So to your point, if you can get on a rocket ship, you can experience growth, product manager is one of those brilliant positions where you are at the locus of power and decision making. You have to deal with engineers. You have to deal with designers. You have to deal with whoever the stakeholders are, the CEO founder, the sales team. I mean, it is the locus of

power. It is the center. Grab that job and do a great job. And if we were, if somebody emailed us and said, I was a PM at Google, Facebook, Uber, Airbnb, and I'm starting a company, how much more credible are they than somebody who didn't have that credentials, Zach, in your mind? Oh, it's huge, especially if you're there during the growth periods. Like, you know, now, like an early days PM at those companies is different than one when those companies are much more established. But the thing is that like when a company is growing, what happens is that everybody basically gets escalated to the limits of their own competence. Every, then you have as a as an insider, you have institutional knowledge about the business, about how things are working. And they're constantly pushing you to solve harder and harder problems.

And so the limits to your ability to learn and your ability to like to grow as a human are not opportunity, but instead your own personal competence. And so that just is just an amazing crucible for human growth. And then therefore when those people come out of that experience, I mean, they just have seen the other side of stuff that very, very few people get to see. And they understand in a way that I don't think you can understand it until you go through that hypergrowth. what that's actually about, both in terms of like delivering value and understanding how that works and then how to basically deal with the insanity that comes when you succeed. That is so well said, Zach, if you get into one of these big companies, they're going, and they hit that hypergrowth period. Like, think about Robin Hood the last couple of years.

I don't know if you're heard today, but I think Vlad said 22 million members. And then last year it might have been a 10 or something. Now, imagine you're out of company when it goes from 10 to 22 million members. members in whatever it was, a year or two years, or even from one, from zero to one million, like those moments in time are so rare. Now, if you are in one of those companies and it happens, by definition, that company is under-resourced, which means each person there is not going to be fighting for responsibility or opportunity. They're going to be drowning in opportunity. You're literally, you know, in a surge and the ship is just flying at a hundred miles an hour

across the ocean, full sales open, you're going fast. They need all hands on deck and you're there for it? Oh my Lord, it's so exciting. And this is why our industry is such an amazing industry because what does it take to be a product manager? You have to be organized. You probably need to know how to do mockups. You need how to do project management software.

You can learn all that this weekend. And over five weekends, you can learn how to be a project manager, make wireframes and whatever, you know, wireframe software you want to use. There's InVision, there's balsamic. This is a zillion different ones. Project management, you can learn super easy. There's 10 books on it. Just buy all 10, read the top three.

People are so limited in their thinking about how to break into this industry. I think being a product manager or working as a growth hacker or just in the growth department are two of the easiest ways to break in because there's no college degree for those, are there? Even if there was, I wouldn't trust it. Yeah, just a course online. Yeah, any college basically who claims to teach you how to operate in Silicon Valley's align.

And you could learn to be a product manager so quickly. And you would love to have the Robin Hood project manager, product manager today, and previously you'd want the Google one. But a Google product manager today is probably not as valuable as a Robin Hood one today. Yes. Who's going to the hypergrowth is your point. And I think it's a great point. Well, one of the things that a lot of people under us,

estimate is when you're hyper growing like that, you actually get exposure to secrets that other people don't get to see. And so you get to be the first one exposed to like some aspect of the business that nobody knows yet, but like you guys have discovered. And those secrets are not always just in terms of the actual way the business operates, but often it's in the infrastructure. So like for instance, in my business, we were one of the first companies to get exposed to quantitative marketing at scale. How do you use data to execute? really, really high volume marketing campaigns and then measure it back. And then my sister basically took that and she's built this multi-million dollar performance agency with all of those secrets that

she learns. And she took ring from 10 to 100 million in revenue just by taking what we had learned went in the ring and was like, hey guys, here's how you do it. And like, woof, off goes the business. And she's done it over and over again. It's just literally like you get this secret playbook and this it's almost like you become a mutant. Like you're becoming a superhero by getting exposure to this, you know, startup radiation. Yeah. That's a good guy like that. That's right.

All right, Zach. You're awesome. We'll see you all next time. Bye bye.