Episode 541: Jon McNeill: Why “Less” and “Simple” are the Smartest Growth Strategies

You're listening to Habits and Hassel.

Press it. - Guys, this guy's in Miss John McNeil.

“He wrote a new book called The Algorithm.”

And this guy's resume will blow your mind, okay? Like, you were the president of SpaceX. - The Tesla. - Tesla. - Yeah. - A Tesla. - Yeah. - But you were also a SpaceX.

- I was at SpaceX every Friday, 'cause that's where a design center is. - Oh, so you did it. - Yeah. - Okay, so with that year, even on the title of the book,

I'm going to read your bio normally. Don't know. I read the bio afterwards. And then I input it. Let's just do this together. Sorry. Okay. Let's see here. The CEO and co-founder of well, your new company is called DBX Ventures, former president of Tesla and CEO of Liff and current board member of GM, Luleleman CrossFit and stash and a company called I can't agree. A surrogate. Okay. Yeah. But also, that's just like the little bit of it. You were also consulting at being. Yeah. You

extended your own six companies. You had six companies that you already exited. Yeah. This is just like icing on the cake. Like being Elon Musk's number two was just like, oh yeah, I'm by the way, that's also what I do. Like your resume and I will give it better service. It will be in the intro better. Okay. It is insanely impressive. Yeah. I feel like the forest going of business. Like I've been able to cobble this together. It's been pretty good. Really though. I mean, okay. So let's start with the

beginning because if you're at Bane, where you can see also, just a Bane. Okay. Just Bane. Like they're not picking dummies. So like you obviously had like pretty a great pedigree even to get chosen to be a Bane. So what was your like academic backpack right? I had to beg my way into Bane because I was a I went to a Big Ten School of North Western. Yeah. They hadn't hired non Ivy League kids before. And so I literally had to beg my way into Bane. Really? Okay. Myself and two other

two other guys, we were the first non Ivy's hired at Bane. Well, that even says something already. Like if they if you had to beg your way or they took two only two non Ivy League, what would make you special enough that they picked you? I think it was, I worked my way through college and I went school in Chicago and I worked at the board of trade. Okay. And I was doing these crazy trading algorithms. I was coding in college. Okay. That story got me in.

Because it was like, oh, this kid's been moving like 10 or 20 million dollars around per trade.

He must not be a dummy. Right. Yes. We've got a dummy. Yeah. And so then you're at Bane. Yeah. And then what I also found super interesting about your story was that usually people who are working at the consultants, like as consultants, they're not entrepreneurs themselves, right?

“But they saw something in you that they thought, hey, you should be at entrepreneur. You should get”

the hell out of here, basically. I don't know what was in the water at Bane at that point. But they were hiring a bunch of entrepreneurs and they were kind of entrepreneurs themselves. So they started this venture capital firm. Okay. Because they were so entrepreneurial. And you know the name of like one of the people that found at the venture capital firm, Romney. Right. Founded this thing. So out of the 72 kids I was hired with, 45 became CEOs of their own companies. So like more than

half were entrepreneurs. Really? And either that would know? You would know Survey Monkey. So it's got Dave Colberg was a founder. You would know a stub hub, Chris Socrates. Yes. You know a stub hub. So I all across the valley. You find people that like we all started together and we were entrepreneurial. So it wasn't hard for them to say, he kid, I think you're an entrepreneur and we want to back you. And when did you show them? What did you show them? What was the right thing? When we met

with entrepreneurs rather than getting excited about the spreadsheets? Yeah. I was excited to go back to the office with the entrepreneurs. Really? And work on the problem with them. And so they saw

“that enough where they were like, hey, I think you're an entrepreneur and we've got this venture”

fund. We'd love to back you. So then what happened? So then I looked for like three or four months for an idea in a business plan that made sense and they backed it and it turned up the first company

worked. So we went from zero to like 40 million sales in 18 months and a public company came out

and bought it and they said, do you have idea number two when I was like, yeah, I kind of do. What was the first idea though? So the first idea was we were writing software, we were writing software for big call centers. Nobody had written call center software before. And so we were writing software to run big call centers and it just took off. We were right place right time and right team. And then you did that five more times? Five more times. Yeah. Not all at once, but in a row.

In a row. That's the same. So the first company got you sold the first company in 18 months. Yeah, I have 13 months. And then started a second company that company grew to about a quarter billion in sales in three years sold that to a public company and then just kept doing it because I loved it. So what was the biggest exit that you had of the six companies? Oh gosh, probably company number six, they got more valuable over time. Wow. And so company number six

sell it for at the time? So that so I I have rolled into that company. And so like I'm I've held stock in that company for 10 years. It's the company I started right before I worked at Tesla. So it's interesting because on your resume, you were the COO, you were the president of this,

but you were never the CEO. Why is that? I was I'd been a CEO six times. Right. And Elon and

I met and he was looking for somebody that saw me come help him and relieve him so he could get back to his first love rockets. Oh, look, let's start. So how did you even meet Elon in the first place? So a mutual friend of our Cheryl Sayonberg introduced this to each other. And so Elon and I wait. Right. Hold on. That's interrupt you. Yeah. Because David Goldberg was husband who I was very friendly with when he was at a company called he started a company called

launch right here in Santa Monica. Yes, in Santa Monica and I was I was very friendly with him. You were. Yeah. Like yes, he was a very nice person and I know his brother also. Yep.

“And then he started serving monkey. Yeah. That's what I was talking about. So you knew David”

from serving me from being. Yeah. So I didn't know he was at being. He was. He was at being

and we both got assigned this terrible project our first project out of college. We get assigned

to meet packing plants in Minnesota Nebraska and Iowa. And what's the from like when he's from Minnesota? Yeah. I'm from Nebraska. So I think they looked at like where we were from. They're like nobody's going to take these jobs. We'll just put these guys on it. Yeah. And so we became lifelong friends because what else are you going to do in a meet-backing company? Yeah. That's crazy. So when you said like when you said serving monkey didn't click right away and then when you said

Cheryl Samberg, your friends with her, it kind of all made sense. So you met Cheryl obviously through David. Yeah, she she loved my friend Dave and I loved her right. I loved her for that. She's just fantastic. And so David, you know, passed. Terrific. Terrific. And they ever find out of figure out like

the whole situation. I besides treadmill. Like it's I don't know. Like I don't know. But it was just

it was horrific. And so several months after he passed, and Cheryl introduced Elana. Wow. Okay. So she met, you met Elana under what context was it like hey, Elana's looking for a number two or hey, just meet him to talk about business. It was Elana looking for number two. Right. And I sort of went into those conversations and said, I don't know if I'm your guy. I've been like my own boss. I've been at a boss in like 20 years. And none of my companies were as big as

Tesla was at that time. What year are we talking now? I'm talking 2015. Okay. Yeah. And so we start to get to know each other. And he's like super intense. No surprise. Yeah. And so right as we start talking, he's like, I have this problem in my factory. And so he starts to describe the problem. And we start to like break down the problem. And like two hours go by. And we've kind of work our way to a solution because I'd seen that kind of problem before. That's a problem. It was a production

problem with the Model X. It couldn't get the doors to work. The Falcon Wing doors. And so he called me like two days later. And he's like, I went to the factory and did, but we like worked on and it turns out it's helping. And he's like, you want to talk again. So we talked again. He's like,

“I have the sales problem. If you've seen this before, I'm like, yeah, here's how I think about”

breaking that down. And so we get on these calls. We just problem solve. And then eventually he's like, why don't you join the company? So how long were you on the phone with him problem solving for how long ago? We could be on for hours. No, no, no, we're how long with duration. I think you have a couple months. Yeah, couple months. We're getting to know each other. And I just really wanted to figure out if I could help him. And and be useful. And it turned out there were ways

I could be useful. So I decided to join the best practitioner of my craft on the planet because there weren't really no entrepreneurs have created like four or five companies. Each of them are worth multiple, multiple tens of billions of dollars. No, I mean, and by the way, at that time, Elon I mean, he's a genius. He is. But he's like, like, a crazy genius, right? But he, he didn't display that amount of crazy back then. Exactly. What would say he has now, right? Yeah.

But did he have like elements, did you see? Oh, yeah. Like, he's like, he'll tell you,

“like, he's out on the spectrum. And I think all geniuses are kind of out on the spectrum in”

ways. And yeah, he's he's fun and nuts and is smart as person over me. Like, literally, the smartest person I'll ever meet. By a factor. Yeah. Yeah. Like, like, like, how is it? Like, wasn't even, even able to work? I call it when you add Tesla for a close to four years. Right. Were you working with him, like, side by side? Yeah. Yeah. At the beginning, we'd travel constantly together because we were trying to do this Vulcan mind meld where I could learn as much from him.

So what would be the dynamic? I mean, you being the COO, him being obviously the CEO,

and like, brain, like, basically the, the visionary, I guess. That would probably be a very,

like, you, you'd have to have a lot of like, social, social, social emotional IQ to know how to navigate that relationship. We actually ask Cheryl, how she and Mark handle it. And we applied a few principles that they had, which is number one, they had really good tight definitions around what each other did. We called those sandboxes. And we said, okay, this is your sandbox. So Elon, it was product and engineering and manufacturing. He's like, these are the three things I love.

I'm like, all right, I'll take the rest. And so we would respect each other's sandboxes, which was really good. And we spent, at least an hour a week together catching up on those two things. So we were in sync. So it was clear what he was doing, pretty clear what I was doing, and we made

“it work. Really, so he didn't micromanage you? No, he was like, I think the thing that people don't”

realize, one of the things really fun about working with him is he's kind of figured out to two or three things that he has to work on that are existential for the company. And then he gives his team agency and everything else. So literally we had agency to go run the rest of the business. And that was, for me, super fulfilling and a lot of fun. Because we were taking the business from 1.8 billion in sales when I started 30 months later, we were at 20 billion. So we 10x the thing.

So it wasn't like there was a little bit to do. There was a lot to do. There was a lot to do. Yeah. So what was your first, you know, your first piece of business to kind of get that company

to 20 billion? The first thing, like when I was, when he and I were getting to know each other,

I was trying to figure out, can I be helpful, useful? And so I went to like, I was traveling a lot for the business that I just started. And I went to eight different Tesla stores. And to test drive. And each store gave them a different email address that they wouldn't like catch on who I was, what I was doing. But this super crazy thing happened, like I did eight test drives. And that's supposed to be like the pinnacle of the sales process. But nobody called me back, nobody followed up.

So I called the head of sales ops and I said, hey, look, take an eight test drives. I've gotten all the way through your sales funnel. Nobody's calling me back. What's going on? And my, like, flagged in the system. He's like, no, you're not flagged in the system.

“So let me ask you a question. How many cars do you have to sell this quarter to meet your”

targets for Wall Street? He said 12,000. It was a month and a half into the quarter.

I said, how many sold? He's like 3,000. I'm like, you're not going to make your number. You're not going to make your quarter. He's like, no, I said, tell me how many go look in the system. Tell me how many people have done a test drive like me and haven't been called back. He's like, give me an hour. It's a call is back in an hour. He's like, would you believe it? Like nine thousand. I'm like, are you kidding me? Wow. You could make your quarter. All you have to do is follow

up with these people. Why aren't you following up? He's like, I don't know. I said, okay, do this. Shut off all new leads to salespeople until they follow up with all their test drives. And once they've followed up with all your test drives, you can give them new leads. And he said, I can do that. It's a great. Do it. Calls me back the next day. He's like, you wouldn't believe it. Like, we're selling cars. I'm like, yeah, no kidding. You're following up with people. And then

Don Domay. I didn't work for Elon yet. I hadn't joined the company. So I called Elon and I said, look, I'm super sorry. I haven't had a boss in a long time. And I was acting like a CEO. And here's like, here's the context. Here's where I did. And he's got, he's got this famous long silence that I didn't know about then. And the college is just silent. I'm like, oh my god, what have I done? And he comes on after like a minute and he's like, you know what? I think you're going to fit in here just

“fine. So that was the first thing. And that's how we got like, it was dead simple, which I found”

most of business is dead simple. If you just follow your own, you like go to your front lines and figure out what's going on. You usually see what's broken in your business pretty quickly. Well, what's the couple thing that I want to say? Number one is I want to know how many cars they ended up selling when they actually followed up. They made their quarter. So they did it. It's a big asset. They exceeded it by just a little bit. But it was kind of a miracle, because they

were halfway through the quarter and nothing. And nothing. And less than a quarter of the way to their goal. So how did these people not even know to like, to me, that's like a no brainer, right? Like, you're going to go in for a test drive. Like, how are they going to make any, like, as a sales person? That's how you make your money is in commission and percentages and all these things. What kind of sales people were you guys even hiring that they didn't know? That's people. We were hiring people

who were passionate about the environment. And therefore, they were passionate about explaining the car. But they weren't sales people. They weren't trained to ask the order and they weren't paid a commission. So they had none of the like the mechanics lined up for success. But what we started to do

many cars that they split months. Right. Right. And so we were able to get a team effort going,

“which was non-commissioned based in a little bit softer. But we were able to get the incentives”

lined up with what we wanted to have happened. And so you went into these eight stores without a job. So what was the position with him? You were just like, you're just in the nips of like talking about business. I was in the marketing thing. Like figuring out, yeah, could I, could I be an effective number two to him? So you just were like kind of like going around, so this was on your own. Yeah. Oh, like you kind of on your own accord. Hey, I'm going to go to eight stores and just do all this.

Okay. So then when you called him, of course he's going to hire you because you would have buttoned beyond. You probably sold thousands of cars for free. And like you showed your value. Like which by the way, should be like business 101. Like everybody should be doing that. Everybody should show value. Right. If you can. Like the door swing open for you. 100% and like stand out right in a competitive environment. Like it wasn't like you were

applying to like work at like McDonald's as like the night time supervisor. Right. You know, you were like applying to be like Elon's number two. I would imagine there would be a stiff competition. Was he like higher or sorry? Was he like interviewing and talking to a lot of people? He had talked to a bunch of people. I don't know how many people he was talking to a bunch of people for sure. So if you were to when you asked him, or did you ever ask him like why he

hired me? I never asked him that. I never asked him that. I never asked him that. I never asked him that.

But we did talk about it because I kept saying to him like, I'm not your guy. Like I think I think you need a big company car guy. Because you've become in a big car company. Yeah. And he said that's exactly what I don't need. I need the opposite of that. I need a fellow entrepreneur. I said, why do you need an entrepreneur? He's like because you understand how to handle enormous risk. Like you understand when it's like to not be able to make payroll potentially

and what that feels like and he's like, you know how to get capital and I need somebody that knows how to deal with two things. I'm not going to find somebody in a big company who knows how to

“do that. And so I think that's what he saw was just a somebody who has wired like him as an entrepreneur.”

So can you just tell everybody like what is it? What's the role usually of a COO versus the CEO? CO sets the vision, hires the team, raises the capital. That's kind of the three jobs of the CEO, set the vision, hire the team, raise the capital. And then the COO or the present it has, sort of makes trains run on time. Mm-hmm. You achieve the vision along with the team. So if he's typically, that's what the reason why I was asking you is because in my experiences,

the CEO or the person who was like the founder, like would be the one raising the capital. The COO typically doesn't have that position. No. But yet he wanted you to have that position to be able to raise capital, use that. Well, to be able to allocate capital. So once the capital is raised, like, now what do you do with that? Now you do it again. Why does it get the best return? Because you can put a dollar over here, a dollar over here, a dollar over here, where is

going to get the best return? Yeah. And that's typically what what a president's pretty good at trying to figure out, okay, now I can make the trains run on time and I can actually allocate capital to create a money machine. What I love, okay, so when I was going through this book and reading the book, what I really love, is how you create these frameworks, of how to actually build a thriving and successful business, how to scale, how to do all these things. And there's a

lot of like great little actionable things that people should really listen to that can really make a difference between a company being good to great. You know, not to talk about it, take your

balls. Yeah, which is a great book. Exactly. It is a good book. And the first thing you talk about

is basically to question all the different requirements. Right? Yeah. Yeah. Can we talk about that? What do you mean when you say a question that requirements? So literally you start to question the requirements.

“Like, so to give you an example, like we, we started to say, could we sell cars online?”

This is 2015. No, he's about a hundred thousand dollar thing online. Right. And we said, if we could, our cost of sale goes way down. And we were competing against big big car companies to spend two to five thousand dollars per car that they sell. We didn't have that money. So we had to figure out, okay, how did we do this? We can't put a store everywhere. Right. And so we said, how would we sell cars online? Well, you got to remove friction. Today it takes a 64

clicks to sell a car. Could we get that down to 10? Well, the big source of the clicks is all the loan documents that people have to go through. It's like dozens and dozens of pages. So we started to question their requirements. Like, are all of these paragraphs legally required? Yeah. Are they regularly required? And the answer was actually, no, they're not. They were designed by lawyers over time to protect the banks that they work for. So then we, we said, okay,

what, what do you really agreeing to in and out alone? Right. Super simply, you're saying, this is the price. This is the interest rate. This is the payment. And this is the amount of time I'm going to make that payment. And we said, we put those four things in four sentences in one paragraph. We could have a one click loan. And nobody had ever done this before, but we just thought,

So how could we get a one quick loan? One click loan. We went and talked to dozens of banks. They told us we were not in basically through us out. And then we finally got to this bank in Minneapolis, US Bank. And they said, we'll do it. And all of a sudden, we had taken a 64 click process to buy a car down to 10. And now you can buy a car at Tesla in about the same number

of clicks you could buy pizza. It's amazing. That is incredible. That also is another principle that

I read in the book, which is simplicity over complexity. Totally. Totally. People make the simple things much more difficult than ever has to be in every area of life. Right. Right. And so does that like, is that part of like how you kind of grew like all the businesses, all six of the business, like exits that you had, Tesla. And also lift and is that basically the whole, like who's who's principles that? Is that your principles? Is that you guys? No. It's a guy. I learned this in my

second company. I was super lucky to have a board member. Okay. Who's a mentor to me to this day? His name's Fred Massoni. Okay. Fred was the first person taught by the Japanese their production system, which is all based on simplicity. And Fred told me like the best leaders are the greatest simplifiers. And like we've all heard the line like Mark Twain's line like I would have written your shorter letter if I would have taken the time. Yes. Simplifying super duper hard. Really hard.

And so he taught me how to be a simplifier. And then when I learned the power that it's a complete hack as a leader. And to your point, it's a life skill, too, because being simplified, different aspects of your life, it just gets a whole lot easier to execute than complexity. And also like the time that you say, the efficiency that you say, the stress, the amount of stress that you say, all the things. Give us an example of how that would play out in like becoming

“like growing a company or in your own life basically. Like we so in growing a company like I think”

product is at the core of every company. And if you have amazing product, people will be to path to your door or they'll rave about it. Right. It's been on marketing, etc. And you think about some really successful companies. So take Apple, take Tesla. They don't have like a hundred varieties of their product. They've got like three. And the reason is it's really, really much simpler to get a supply chain, producing those three, to get factories, producing those, to market them,

to sell them, to distribute them, etc. And so simplicity like really, really, really pays in product businesses. If you have the discipline around it. And so like Tesla has one car of the model why that sells 1.4 million units a year. And it's the best selling car in the world. They don't have 10 or 15 different models. How many does it sell? 1.4 million units. Still. Still. Now, even with all the stuff. Even with all the stuff.

Creativeness. Even with all the great. Even with all the great. It's still selling that many.

“Yeah. Still the number one single selling car in the world. Wow. Why do you think that is?”

Because rather than producing like 10 different SUVs, we've figured out the one that would work for the biggest chunk of the market. So we simplify it. And then we simplify the production and the parts and the manufacturing process, all that sort of stuff. It's so true. Like, you know, I always notice that the companies I always say start with one skew be your hero product. Yeah. And then like let that be really successful before you branch out

and have a million skews. Exactly. Right. Yeah. Because then like you're always going to be like,

you're basically competing in cannibalizing your own business. Yeah. And we see this like the athletic market. All the time. All the time. Yeah. Where you've got gazillion skews coming out of places like Nike and Adidas. Yeah. Yeah. And then they go to compete against on and on's got like 10 skews. Right. And on's got a simple business to run and it's faster to grow and it takes less capital, etc. So yeah. I'm a huge believer in simplicity. And that's kind of the second the second step

of the algorithm was once you want you sort of question all the requirements, then you've got to like super simplify the process to deliver against those requirements. So, but so like if you learn this from your mentor or so did you implement this at Tesla because of or did Tesla already

“have this vision? I think Tesla had this in the culture because he like he talks about this like”

he's he's a physicist at his core. Physics is all about simplifying the complex down to the utterly simple and it's called first principles. And so there are first principles and physics. And so he kind of already had this mentality to simplify simplifying simplifying and I plugged into that because I did too. I like that was that was completely natural to me. Right. So part of probably why you got along with each other. Yeah, so I think of why the why I fit in that culture. Right. Yeah.

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the best work of our lives together. We're still in touch with each other. I still text back and forth years later with the core team that I was on. Really? And two of my partners in my venture from now were members of that team. By the way, talking, speaking of your venture firm,

“we're going to go back, how big is your venture firm? What are you doing at the end of the day?”

We do this really unique thing. We invent companies from scratch. So rather than funding entrepreneurs, we have to fund our own ideas, and we get those companies growing, and then we bring a team into run them. It's a new model in venture. Reverse engineering. It is. You start with the market, and you say, "I want to attack this market with this product. We're going to build the product, get our first sales, and then we're going to find a world-class team to come in and run it."

So it's a venture model that I had thought a lot about as an entrepreneur and decided to implement. There's a handful of us doing this in the world, but not many. It's a pretty unique form of venture.

That's amazing. We're doing a company that you're working on now that you've done.

So we've got a cyber company called Cork. We've got the number one AI infrastructure ETF on the trading on the market. That's called VistaShares. We've got a supply chain company called Atomic. Payment company called Zumi. We've got a bunch of, we've started, we've got a portfolio of 17 companies. Wow. That we've started in the last five years or had a hand in starting. How big is this fund? It's now, it's going to be closer to a couple hundred million dollars.

Interesting. Well, okay. So I just wanted to ask you because I was curious. But it sounds like a lot of your background is kind of manufacturing software, software, for sure. Software, obviously. It's kind of like in that real house. It's like, because all the companies you had before cars, I guess, now, was cars before you did Tesla. Did you have a car company? I did a couple that were in the product company.

“A couple of companies in the automotive space. I think it came from my granddad owned an”

auto repair shop and that was my first job and I think it just got in my blood somehow. I love cars. So yeah. So I've had some touch with the car business, my whole career. Do you drive a Tesla now? I have a Tesla because I've set on the board of general motors.

Yeah. I primarily drive their cars. But I have a Tesla because I always want to be driving

the best of the competition. And Tesla is the best competitor to GM right now. What are the, what kind of GM car are you driving? I'm driving a two. I have got a Cadillac Escalade IQ, which is this huge. Beautiful SUV. It goes 500 miles. And then I've got a Chevy Silverado EV pickup that also goes close to 500 miles. Wow. I think the pickup might be my favorite right now. Really? Yeah. But where do you live in Nebraska? I live in Colorado. Oh,

Colorado. Okay. So okay. So let's go back to the Tesla thing. So basically, the right, so you, right. So then you, you guys were getting along and the fact that you guys have the same type of like mindset or a framework ideas about simplicity, over complexity. And then you also had something that I heard you talk about, which I thought was fantastic. And I like wrote that down. Okay. Which was how you kind of weed out the bloat of a company and the people who are underperforming.

Yeah. It was reminding me a lot of like animal farm. Or you know what I mean? Because you make the people

Can you simple way? Like, yeah. We try to simplify it. This crazy, crazy thing that happens in companies every year that nobody really likes is called performance review season. Right. And so like, as a boss, you get to sit down. You got to write a bunch of performance reviews. There's a

“bunch of resiliency bias. Because you don't remember what that person did all year. You remember”

what they kind of did in the last few months. So it's not even fair. Yeah. And everybody kind of hates at the employees hate it. The boss is hated. Everybody hates it. So we debated like, how could we like make this actually useful and not a chore for everybody? And what we evolved to was just asking people like, who had the first question? Who if you worked with this year? Right. And then just put a checkmark next to the people that you would want on your team. And that was it. Didn't ask them

why? So that was it. So super simple. I write all the people I've worked with. I put a checkmark next to the people that I would want on my team. And that creates a list of people that are really useful. Because you see their name mentioned again and again and again. Those are the people

who are up for promotion. You see a bunch of people that are never ever mentioned by anybody. Like,

they clearly are dead weight on teams because nobody wants them on the team. Those are the people that you can then kind of clean out and reload the talent system. And so it was a really simple way to just identify talent and reward that talent. And then also identify kind of the bottom 10 or 15 percent that probably needed to move on. That's great. And then how would you get rid of them? We were just telling him, hey, this doesn't look like it's the place for you. So thanks. But this isn't

going to be a place for your future. And did you do that every single year? Did that constantly? How often? Sometimes a couple of times a year. Wow. So you're constantly just reading out like dead weight performers. Yeah, dead weight. You're super smart people. Like, to get an engineering job at Tesla, they get probably 40 or 50,000 applications for every job. And so they're super smart people. But for whatever reason they just didn't work on the teams. But by the way, that's not only

at Tesla, you could do that with any place. You could do it with people like a mighty, you know, like with a people. You know, you mean it doesn't matter. I just think that when you put the onus on someone else to tell you because they're telling you based on their own experiences,

“you can't be everywhere. You don't know everything. But the best way to know is to ask the”

people on the front lines. And you talk about that. The fact that you really want to know what's going on in a company and what's really bad in a company, you go to the people who are in the front lines who are like doing the work. Exactly. You know, exactly. It's the best hack ever. I learned

this from Sam Walden because I read this book made in America. And it's basically the book

about how he travels from store to store. And the first thing he does when he visits one of his stores he goes in the back. And he talks to the warehouse guy. Because the warehouse guy knows everything about the store. He knows what product is moving, what product isn't moving. He knows who's like who really works up front, who doesn't work. And he got all the information he needed about the store. And then he'd go talk to the store manager and say, hey, look, I know exactly what's going

on your store. I'm going to be like, how? And then they finally figured out what he's talking to the front line people who actually know. So I just borrowed that. And I said, like, this is the best hack in the world. Like I go to the front line. They're dealing face to face with customers. So they

know what the customers love. They know what the customer's hate because they're getting the first

run of that. Yeah. And he's asked him, like, what do we need to fix about our product? And they're like, oh, this, this and this, he fixed these three things. I don't have any more complaints. It's like, okay, I can make that happen. And I would have the standard question when I went out to the front lines,

“which is okay, you have my job. You have all the keys to the company. What's one thing you do today?”

And I wouldn't get 500 answers. I'd get like 5 to 10, like, just this. And so literally, my team's got used to, I would be on Friday's typically on the front lines. And I'd send emails and say, here are the three things we got to work on. And they just got used to it. Right. And then they started to do it. Because they wanted to be out ahead of me, which is the right motivation. What was the the most common trait of all the top performers? A couple of things. One is in that

culture, believe it or not, there's this really cool combination of humility and confidence, which kind of sounds weird. But the goals were so high. Like, Elon's awesome at setting aspirational goals. So the goals were so high. And you had a choice, like, when you put a goal in front of you, it was like, you're crazy. No, or most often, this humble confidence would come out, or you would say, I have no idea how to do that. They came to me and he said, we need to double this company every

at months. And there's no marketing budget. You can't spend a dollar in marketing. And my first reaction was, that's insane. But then I kind of zip my lip and I said, you know what, I don't know how to do that. But then the confidence comes in a bit, like, we're going to figure it out, like, challenge accepted. And that was quarter that culture. And so when you saw people who were really effective there,

Let's go figure it out. And then they would work like crazy to figure it out. And what I learned was when you set super ambitious goals for people, then they will work to achieve those challenges.

And if you never asked, and they never worked to achieve them. Absolutely. Because people never know

“how much they were actually capable of. Yeah, that's what I kept saying about, yeah, I like,”

I kept saying, man, I didn't know I had this inside of me. And he was pulling stuff out of me that I didn't know I had. And I saw it in the people around me and the teams that worked for me, too, that people were given what they were accomplished much more than they thought they could. Right. Because you're constantly challenging them to push themselves. Yeah, exactly. Because people sometimes, people don't see, they don't know unless they know, unless they do.

They must have been challenged. Right. And then more, they do what they have more confidence in doing a harder thing and more and more and more. Yeah, exactly. How are you able to manage Elon's expectations? Because he's like, I don't think he can manage his expectations. We just had to really work hard to deliver against those expectations. Because the expectations are reasonable. Like, I used to be a founder, too. So I had been on the other side of this and was really setting

high goals for people and holding them accountable to achieve them. And so I felt like now that I'm on the other side in the receiving end, I had to be doing the same thing. Right. So I was going to say, like, because, you know, if you're going to ask other people to do exceptionally hard work,

“right. You have to, you have to, it comes, it basically falls from the top first. Right. So”

because I, I, I heard that he like sleeps in the office for like days on hands. That's true. He does. Like, we would have problems in the factory and we would be sleeping on the factory for for weeks trying to figure out like how to solve the problem. So it wasn't like he was dumping the problem in our labs and taking off. He was in the trenches with us and that that then brings a lot of conviction that we ought to do that too. Oh, 100%. Yeah. You stepped to the office.

Yeah. Oh, yeah. For how long? Yeah. I think didn't go home for how long days. Couple weeks. Well, I, I mean, I would go home. Yeah. But it might be two or three nights in our own and go home. I, and then. So we will, you go home for, you, you stay at the office for a couple of nights, just three nights. And then you go home after a few nights. Yeah. And then what, like, just come home and come back to the office and then get again for a few nights.

It basically, because the company was like in survival mode. And so if we didn't solve these problems,

we were going bankrupt. And so like it was, it was dire streets. And I don't know if that happens now as much, but in that era, like we were almost bankrupt a lot. And the press was talking about it. I totally remember. And they were wrong that we were really fragile. Wow. And so then like, how do you, like, if you don't mind me asking, you could tell me to shut up. But then how do you get compensated as a COO for something like that where you're like literally like sleeping on the floor

of the plans for days on end, for weeks on end. Like, because you're not there anymore, right?

“Like, I know you have stalked probably. But like, you must have felt like you were like a part,”

like there must have been a feeling even of like being on a team. And, you know, like not letting, I mean at the end of how are people being compensating for that? Like, I think the compensation comes as a leader, the compensation comes from looking around at the team and the people that are involved. So they're literally like, 7,000 people working in that factory on a per shift. And if we didn't get this right, they'd be out at work. And that was my motivation. My motivation was,

I would, I'm working beside these people. I'm looking in their eyes. And that was motivation and compensation enough for me. Like, we're not going out of business. You're going to have be able to buy groceries, funger kids education, buy a house, et cetera, if we get this right. And that's compensation enough for me. Because you were only, you were there for four years. That wasn't the sort of life time. It's a long time, but it's a long time. Exactly. And then you went, you

moved on to lift. Yeah. So were you still working at Tesla when lift, poached you or how did that whole thing happen? So I had, like, the internet had this conversation and I told him I was going to leave and give him months of time to do a transition. And during that, somehow, the investors and lift found out about that. And, and so they reached out to me and said, hey, look, we want to

talk to you about taking lift public, which normally I just wouldn't return the call, but I'd never

taken one of my company's public before I'd sold all six of mine to public companies. Got it. Okay, yes. And I really wanted it. Like, it's a box I wanted to chat. I wanted to have that experience of taking a company public. But we hold on. Why were you talking to Elon about Elon about leaving? I had, like, Walter Isaacson talks about this in his book a bit, where in this chapter at Tesla, there was a chapter where Elon was really, really struggling with mental health issues.

And my job went from helping to run Tesla to really helping him with mental health issues, for which I am not equipped. I just did not trained. I don't have the skills. You know, it's burying me because I just was trying to help, but I didn't have the skills I had to help. Help him, what way, though? Just to help get him through a really tough time.

And so Walter has seen in his book where I'm laying on the floor underneath the conference room table with the, beside Elon trying to try to help get him on an earnings call. And at that point, I just realized, man, this is, this is not what I'm equipped to do. And so Elon and I had that conversation, I said, I love you and I love this business, but I'm not equipped to do this. And it's burying me. I'm going to go do, I'm going to go do something else. And that was really the core of

that, that conversation. Wow. So are you guys friends anymore? We're friendly. I would say and we're like in touch every once in a while and I'm glad he's in a much healthier place now.

He is. Yes. Wow. Yeah. Okay. So then you wanted to, so basically you wanted to leave the place.

I did. Yeah. I did. So, because you had a, would you, did you have a family? I did. Yeah.

“And so what do they think of your, you probably were working at sounds to me like 20?”

I was working like a, like a mad man. So I think they were, they were, they were relieved. Yeah. Yeah. And so that, okay. So you wanted to leave. So then, people kind of kind of heard about it a little bit. Yeah. Somehow, like it leaked out. And I don't know how it leaked out, but it somehow like down. And so then what, okay. So now, so now, so now walk me through what happens now. So, so then I agree to join Lyft. No, no, no, no. So you said, how did that happen?

So I got a call from Ben Horowitz and Andrewson Horowitz, he's an investor early investor in Lyft, said, I want to talk to you. It's me also an investor in Tesla. I don't, no, they weren't, the venture firm wasn't investors in Tesla, but it's a pretty small world. And he said, hey, I want to

talk to you because you, you, Tesla never made really quarter until you got there. And then they've made a lot of

cores in a row. And, and so we sat down and he said, hey, like I need your help getting Lyft public. And I said, you don't know this, but you're pressing a button that you've tried to know your pressing, but I haven't taken one of my company's public. I'd love to have that experience. So I joined Lyft to COO, they have two founders. So I came in a COO and we doubled the revenue double the market share and got the company public. And then that was also around the time that

“Uber was being beaten up, right? With the sex, was it the sexual overright? Like the sexual overright?”

Yeah, I aroused it, just the right time because the delete Uber movement was like well underway. Right. And so it made it like much easier than it would have been to double share and double sales, because we, we had this opening where a competitor was really stumbling badly. And we were able to come in and scoop up a bunch of market shares and resolve. What's really, why is Lyft? I mean, I don't know if you know this now, maybe you do, but by the way, isn't Lyft and Uber now merged,

didn't they kind of? No, they're still competing. They're still competing. Yeah, because I'm still

doing two separate public companies. Because I, because I'm going to tell you, I always lose Lyft.

Love it. Why? Okay, I'm going to tell you why. I remember when it's always a little bit cheaper. Yeah. And like just a little bit. Yeah. And the courtesy underdog a little bit. Yeah. Exactly. And I just, I find it to be people a little bit more friendly sometimes. So a little more,

“it's more of like the quirky, like quirky young sister. Exactly. And that's the brand position.”

We wanted it to be like against the Darth Vader. We were going to be the quirky young sister. Really? Yeah, totally. And position the brand that way. So it's more friendly, more quirky, more fun in just a little bit less expensive. And so if that was enough. Exactly. That was enough to tip the scales our way. But wait. But doesn't, but now Uber is like dominating though. Yes. So so at the time. So how long were you at Lyft for? Just about two years. Just a little under two

years. Okay. And then one has so that they, they, you said they wipe the IPO. I was going to say why the IPO. The IPO. The IPO. The IPO. The IPO. The, there's a, what's called a lock up after an IPO where all the insiders, including investors can't sell for like six months. So I stayed for the lock up and then once the lock up expired, I wanted to go start my own firm because I'd been dying to do this for like five years. So that's when I left to go do my own thing. Tell me how you were able to then

catapult lifts business just how you did with Tesla. So this is another like simplification. So I sat down with my team. All who had been there for a long time. Okay. And I said like there's a really simple question and a half for you, which is where do we make our money? It can't be in like five dollar rides that are two minutes long. And it's really, really smart, savvy guy on my team. This name's David Bagga. And David said we make our money in two places. 80% of the cash flow comes from

airport rides and rides to the doctor. And so we tested that. It was like, if that's where the product, this is called a profit pool. That's where the profit pool is. We got to go hard after that. And it became apparent at this time that Uber didn't have that insight. So we went hard after airport rides, which are corporate and hard after health care rides, which really, really mattered to people like there are people, there are people that really suffer from chronic disease like

kidney disease. They have to go get dialysis like several times a week. And they have to have a

their health insurance pays for those rides. And so we were able to cut deals with health insurers,

“with healthcare providers, and with businesses, to give those two rides and that helped us double”

revenue. And it was just that simplification that simple insight asking like, where do we make our money? That's really smart. Well, it looks at it in retrospect. What I was thumb-founded by was nobody had asked that question before. I'm like, so there were a lot of people in the business. Yes, that question. There were a lot of people that didn't know that in the business, but luckily David Baguette did know that. And he pointed out our team in the right direction.

So what did you put? Where did you add value? So it was then, well, it was asking that question, and then pointing the business at those two things. So that was your idea, though, to do it. Well, we saw I would say that's the team's idea. That's me asking the question. They come up with the answer. And so now we're all going to implement it. Well, but you get the question. They're going to be like, shit, I don't know. And then they went down a rabbit hole. Well, they didn't.

Luckily, it wasn't a shit. I don't know. It was like, no, here's where we make the money. Okay, if this is where we make the money, then this is where we're going to point all of our resources.

Do you know what I find so interesting? You know, my grandmother would always say common sense

isn't so common. Right. And what I've noticed is in both scenarios and test that with like, wires, no one getting follow-up calls when they're doing their drive. The test drives. The test drives,

“duh. That's how you're going to sell a frickin' car. Yeah. And then at lift is like, where are the”

most expensive rides? And like, who was giving the most expensive, like, where are those rides? Like, we're not making money off $5 rides. We're making money off of these hospital rides. And the $100 chips to the airport. Yeah. And the $100 chips to the airport. Like, focus our attention on the more expensive. Totally. Right. Like, I always talk about the fact that also, that like, you work just as hard as having, you know, whatever. Like, when you have like,

when I, when you do a partnership, that's a million dollars versus 20 bucks. Yeah. So, working like, the amount of work is usually the same. That's a great example. Exactly. And the amount of work is the same. And so why not apply that work to the profit pool? Super simple. Exactly. Yeah. It's like, this is like literally like things that people just are not focusing on. Right. Give me another one. Yeah. I think it happens in a lot of businesses. Like,

uh, at little lemon. When I asked the question, where do we make our money? Yeah. Little lemon has historically made their money in bottoms, not tops. And so it's the pant wall. That's where they make their money. Yeah. So then you dust the question, okay, why do we have all the rest of this exchange stuff going on then? Because it's just deluding profitability. Do your point. And it's like the 20 dollar deal versus the, uh, versus the 1000 dollar deal. So like,

this happens all over businesses. Because businesses get complex over time. And nobody comes along. It's like a garden that gets weeds. And nobody comes along with the garden. And I feel like, my job is come weed the garden. Like, let's figure out which, which of these plants matter and let's water the heck out of them and let's whack the heck out of everything else. You know what, though, this is such, this is so true. And like, I will hope anybody who is like doing business

or interested in business is listening to this. Because you know, if you really think about it, right, like, Lula Lem is a great example. Again, because at the beginning, when Lula Lem is started, they were like dominating, right? Because, yeah, there are no further, like, pants because they

mean girls butts look better, right? And like, that would be the first thing you see when you go

into a Lula Lemman. It would be, it would be the sort of be a little smaller and the pants were beyond the sides and whatever else. It'd be like the first focal plate place that your eyes look. You go into a Lula Lemman now. There is so much, like, you know, as I would say, jackets and it's a huge reward. It's like, there's so much, like, you know, noise and busyness in there with all the bags and the accessories and the bras and 97 different levels of tank tops,

like crops and then quarters and this. And then I'm like, where the hell is the pants? And the pants are in the back, back, back. You got to walk through all this junk and it's like a small wall. Versus, like, make more pants. Well, hopefully you'll, like, walk into a Lula, like, I've been in two today so far. Yeah. Okay. This is part of my spending time on the front lines, so I'd be useful board members. I got to stores. Yeah. And we've got a new team running north

America and literally weeks. They have simplified the store, simplified the story, simplified the product lineup so that it's focusing on a few things versus a lot of things. Look, they're focusing on now. So they're, they're focusing on the three things that yoga are that Lula is known for yoga,

“train and run. And so you should walk in, you should see train, run yoga in the pants are highlighted,”

and there's not a bunch of drag. Yeah. Try. Yeah. Thank you. Yeah. I mean, that's the way I see it, right? Because what were the focusing on, like, for a bunch of people? Well, like, it's sometimes you, like, you lose your way and you say, like, I have got to have casual clothes. Well, then you're

you was about work out clothes that made her look beautiful. And that was the mantra. Like, when I started Lula, the mantra was, we exist to make her silhouette look beautiful. And you said,

“that's what a butt look good. Yeah. Well, we, we had a little bit more dressed up way of saying”

you're have. And now they're getting back to that. They're like, we exist to make all shapes and sizes of her body look beautiful. That's what we do. And we do that with a limited set of skews, not a gazillion skews. But the other problems with the lemon is that at the beginning, they had, they had much better quality. Their quality is one down over the years. It's now like, like, it's, I have people say this to me all the time. Like, the quality is so good at Lula. Like,

I'm wearing stuff that's like five years old or six years old. And I've tried aloe, I've tried vory and the stuff wears aloe. Oh, yeah. Exactly. Like, so that's music to my ears because we really have put a big emphasis on quality too. See, I don't know. I mean, I find that at the when Lula just started, like, right when they're just kind of like just starting 20 years ago, he had their quality was it was better. I found it to be better. Well, I think now you like give it a,

give it a run. Really? Because I know that the aloe stuff is junk. I mean, it's like basically,

like it's, it's basically like the most achievable disposable. It is. I was going to say it's like what is a fast fashion. Exactly. And but they're charging massive prices. Yeah. In fact, they want to be like an elevated brand now. They want to be like a luxury brand. Right. Which I'm like, they have nice styles. But like, that stuff does not, it's not great. Cal,

“that's not great quality. Yeah. So how are Lula lemon zembers now? Are they still good?”

Now we're, we're really in the midst of a real turnaround in North America. They're great in China. Great in Europe. But we've really had to read new or focus in North America and the teams doing that. So it's, it's working so far. What about styles? Are they going to like change the styles and kind of like be a little bit more fashion forward? I think like, or that's not, it's not what the court. You want to stay with the core of what they did. The core of what they do

is, is they stay focused on making a few products just absolutely killer. And that can mean it's more beautiful. In over time, they took out some piping and some zippers and things like that. That we want to add back in because it adds to the beauty of the product. Well, the other thing that Lula lemon just to kind of not to like, I know you're not like Chip Wilson, but, um, is he still on the, is he still like involved? Yeah, he, they kicked him out right

for all day out there. Before I got on the board. Yeah. So that was a chapter before I got it. That was a, what did they kick him out of there again? Uh, it was the, uh, it was, I think the comments that he made about, um, there are certain people that shouldn't be wearing my clothes.

“I know he did. I remember that. They kicked him out. But how was like two years ago?”

That was almost 10 years ago. 10? Yeah. Like God. Yeah. God. I'm like in a, I'm in like a black cool of time. Good. Make time go slow. Yeah, right. Yeah. But what I was going to say about the Lula lemon is, this is what you guys do all the time. Not you because I know you're on the board.

But you guys like take things out that are really popular and then never to never be seen again.

Like when things are like doing really well, you'll never find them again. Like so many of the sports bras that I like gone completely gone and it been replaced by things are a much less adequate. Why will take that feedback? I'll go find out for you. No, no. Let me know. I haven't been in the bra market. So I got to go. Okay. I want to tell you why. Okay. I'm going to tell you this. And then you can like do whatever with that, whatever you want with the information.

This could feedback. This is a feedback loop that we're doing right now. You're giving me feedback. Then I didn't get to take back to this. Well, you can. And I want to get a free bra apartment, but I'm going to tell you what they have. It's a good defaulting fee. I think so. Yeah. It's very cheap for you. Yes. Very cost effective for Lula lemon. They would make a bra that had pockets. Like it would have like two layers. It would be like a material

and then room and then like the material. So I could put my my key. I could put my credit card. Yeah. I could put like my dollar bill. I could put stuff in there. Everyone loved this bra. Everybody loved the bra. And it was like really good support. Yeah. Gone bra. Totally gone. Well, find out what happened. And now they have flimsy bras. Either they had the bras that like you can't like run in them because they're too like flimsy or they have these like

matriently like granny bras that like are like from here to here. I'm like, I'm not wearing either one. Where is this other bra? And so and they're like, and the people who I would ask

at the stores would be like, yeah, I know they always do this. It's like they keep on like

discontinuing the most popular things. I will find out for you what happened. Could can you? I can. I know who that's. Okay. Good. I know you do. Yeah. I do know who that. Who is the CEO now? So we have cozy heows while we're doing a full search for CEO. Okay. So you are doing a full search. When did you guys who was the last CEO? Calvin McDonald was the last CEO. And till when? Until the end of January. Oh, like just now. Yeah. How long was he there? Because he was five

years in the triple the business and he did a fantastic job. Don't worry. We're ready to go. He went to

conglomerate called Wella. Oh, I don't well, of course. I want to take a quick break to talk about

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Uber or the whole thing. So then here you are you like kind of like basically you made the business go from what to what lift. So I forget what the revenues were, but it was somewhere in the order

of going from 5 billion in gross revenue to 10. Something like that. Order magnitude.

“Okay, so then what happens now? That's what year? This is 2018. 2019, 2019.”

Okay so they how did Uber then again, catapult them? Like if you did all these good things for for a lift, you made it more quirky, it was a little bit less expensive. Yeah. Then why are more people not using it and now everyone only uses Uber? Because Uber I think Uber also wasn't resting on their laurels and they have a really good CEO. Now they do. Yeah and Dara and a really good problem. How has he been there? He's been there. He got there, but it's 2018ish around 2017, 2018.

So he's been there eight years and they didn't rest on their laurels. They saw this opportunity in food. Yeah. And they said okay we've already recruited a driver. Drivers not busy all day long, especially in the middle of the day and after rush hour and that sounds like a lunch and dinner. So let's get in the food business. And the founders of the lift were not and still haven't did this day. They hated the food business. They didn't where they weren't attracted to it. And so

Uber leapfrog them because they could use their driver's twice rather than one, essentially. We're in two businesses rather than one. And that completely changes the economics of the business. And lift just refused to do it? Yeah. The amounter was we don't want a car smell like Chinese food. Well that's not really how it works. But it was it's kind of a tragedy because lift missed this window. And a lot of us on the team disagreed with with the founders, which is why basically the whole

management team left. And so Uber took advantage of that too. As aware of they now come spread all over

the place doing amazing stuff in terms of the leaders. Lift now is back to have the market sure

it used to have. Half the market chair. Yeah. What do you think they can do to kind of like if you have to be back at lift, they brought you back. And they don't know now because it'd be very hard to enter the food business because it's super crowded now. It's not just you're going to need to store dash, grub, etc. Postmates is a million. Yeah, exactly. So you've got a bunch of, so I haven't thought about that, but I think it'd be a tough job. Did you take it? No. No. I'm much more excited about

of AI? Like the chatGBT, Cloud, Gemini? I think well in that particular business, like the biggest

“AI problem, maybe the toughest AI problem is turning a car into a robot. And that's what I think”

it's going to come eat the lunch of ride share. Because you see it like even here in LA, when it was like it's really superb experience. Oh yeah. And I think that's the future of ride share, is it's going to be robotic? So when do you think ways is going to take over all ride share, like Uber and Lyft? I think they are systematically like just growing their fleet over time, and they don't have a demand problem because they have more demand than they know what to do with. And so

they're a safety first company and they're really focused around safety. And right now the

technology is good, as long as it's not raining or snowing. And so you see them like going across this southern belt of the US, the southern smile. But eventually they'll figure that out, they'll be in the northern cities too. And so I think they're just being very careful, very systematic and making sure their cars are super safe because they know that as soon as there's a major accident, it's going to be a big blocker in the business. So I think being very patient

and playing the long game. So what do you think other companies are going to come on board, pretty soon, or that? I mean, it's really hard. It's a really hard technical problem to solve, so I don't think there's going to be a lot of problems with companies in this space. Like they kind of own it today. And there's really nobody that can challenge them because their technology is so much better than everybody else's. How many we most are there, even? There's like 3,000 on the road today,

so not that many. Not that many. There are 300 million cars in the US. So we're talking like right

now a drop in the bucket. I'm even surprised that there's not more ubers and lifts, like other companies are competitive with them. Right. Because that market when you have to pay a driver, it's relatively expensive. And so it's less expensive to drive your own car. So people choose 99 times out of 100, drive their own car. But once you don't have to pay a driver and the

“cars are robot, then you open up a much bigger market. And so that's what I think we're going to see.”

How about other places if they are? Like just in terms of like claw, chat, like I said, just like basic, basic, like which one do you like the best? I use claw the most probably. It's okay. And for what would you use it for? I use it for coding. Really? Yeah. So like if we have a company idea, you can literally prototype a company using claw. You can put, put, put, put, put product. You can start to test the product. So he's clad a lot and I use Gemini's chat GPT. I can

use them all because I like to compare them. Yeah. But for tools that we use actually using business building, we're mostly using clawed. Because it changes so quickly. So what do you do? It does change like every month. It's unbelievable. It's really unbelievable. So is there like, would you use Gemini for specifically? What would you use chat GPT for? What would you, I don't know for clawed you said, do you use it for prototyping? Yeah. So I use Gemini has replaced

search for me. So I use Gemini for search. Research like if I want to research an industry, we're before I would ask an analyst, hey, let's build, let's build a whole picture of this industry. How big is it? Who are the competitors? What's the market share? What are the economics? For that kind of research I use chat GPT now. And it does unbelievable job. And then once we have those answers and want to build a company, then we use clawed. So I kind of have three different

use cases for each of those. And they're all incredible tools. It takes us half of the people

and half the capital to start a company now that it did 18 months ago. It's crazy, right? How are these people are sending me these things all the time? This person's not real. That person's not real. How are they creating people? Like there's actual accounts who are growing their Instagram pages and social media pages fast. They're beautiful girls or really thoughtful men. And they're talking as thought leaders. I think they're real. I'm like, okay, I'll follow them. I'm like,

my friends, I go, that was not real. That was not real. How are they doing this? What are they using? Are they using clawed? They think you're actually PT? They're probably using a combo. Yeah, like there's, well, basically if you go back to the origin of the AI that we have today, it's a prediction model and it predicts what words come next and words can be turned into numbers

“and that's how the math works. And so you can get really predictive about words that turn next.”

And pictures are also numbers. Pictures are made up of these tiny little specs called pixels. And you can understand the AI can understand which pixels ought to go together based on patterns that seem. And so it can create images and it can create text. And you can bring those together. And that's like we had bots several years ago that would create fake accounts and create fake followers and all this stuff. Now this is just a souped up version of bots that you're describing.

Because the AI can create the context to create the content and it can create the visuals.

little tool that I've created that it senses one of this was AI generated or whether this is real. But it's going to get better over time. It's going to be harder to do. Wow. Yeah. So who's actually controlling it? Like who's creating? Like someone had, there has to be a human being who's actually directing the AI. Because yeah, for sure.

“Yeah. Right. Because AI is only as good as your prompts. That's what I've noticed.”

Yep. And if you're a shitty prompt or like I am, I'm gained like very basic information. So then who is the expert like in the world that are able to create these? They're experts like they're doing really productive things and kind of just unproductive things too. But like there are marketers that really understand how to use these tools.

And they're doing incredible things. And we're lucky to have some of them.

Lulu and GM and some of the companies I'm involved with. And they've just made marketing so much more productive. Because you can get the right answer, the right message in front of the the right person with high high accuracy. And that didn't lead to product interest and potentially a purchase. It's amazing. It's fun time to be alive. It is. It's a really fun time to be alive. I mean, but like so jobs will be like kind of depleted. But they think humans are really good at seeing

the job disruption. Yeah. But we're not good at seeing the jobs that get created on the other side. Because it's almost impossible to see that. But so if we were talking about, we were talking to each other 120 years ago. It was in that long ago. Six out of eight people worked in agriculture. And then this thing came along called the tractor. And there were a bunch of doomsayer saying, oh my god, like six out of eight people are going to be unemployed. The country's going to implode.

Well it turned out there were a bunch of jobs that got created in that industrial revolution, like car factories. Other things that people went and did different jobs. We're not good at seeing that. We're good at the doom and gloom, but we're not good at seeing what's on the other side. Exactly. Every technical revolution in history has led to an expansion in GDP.

So do we believe this is going to be the first one? I don't. I think this is going to lead to

expansion and jobs and expansion and wealth. But we just can't see the other side yet. Right. We don't know what we don't know. Right. I don't know. That's the other issue, right?

“Yeah. Yeah. I mean, so that's what you're really focused. You're focusing really on”

your venture fund base. They're creating, you know, even like, like, it's just your creating real, like real companies. Real companies and then problems in the real world. And then actually what are some other things that you're noticing like in the marketplace? I think that's, we want, we want to be solving like real problems in the, in the real world that have kind of a physical aspect to them and make that, that physical process better because we, we know that's going to be

protected in the end. In a, I revolution. Wow. So yeah. Of course. Okay. So let me ask you a couple other questions about frameworks from your book, right? Because I think that this is a very good book for anybody who's looking or, yeah, who is an entrepreneur who's growing a business. Also, what I find interesting, we can talk about this actually is that, you know, to get a company from zero to, say, a hundred million is a very different than scaling it from a hundred to a

billion. Exactly. Right. What are some of the things that people, like, what are some of the people get wrong when they're trying to scale a business? I think when you scale it from zero, it's the hardest chapter of a business because most of the hard, most of the, it's totally, it's, it's like terribly hard. Like, I'll, I teach in some business schools and students will come up and say, I want to be an entrepreneur and I'll say, why? It's not the hardest thing ever to take something from

zero to get your first million or five million in sales. And so we, we to work a lot on what we

call product market fit. And that is, can you get a product that is so attractive that people rave about it? And if they rave about it, then you don't have spend marketing dollars. And that is, that's a signal that you're onto something. And so we spend a ton of time on the product and like polishing it and making it, making it super attractive to our target. And so that that says, you got to know your target and you got to know what they want and you got to deliver against that.

And that tends to take a lot of work. It's another form of simplification that's really, really important to get right. I was with Steve Jobs's chief of staff from way back. And I said, give me an example like how you guys simplified product. And he said, oh, all the work happens

“up front. So what do you mean? He said, like, that's the hardest thing you have to get in the room.”

You got to figure out what you're going to make and why you're going to make it and it's got to be really simple. So give me an example. He said, okay, get in the way back machine. We made the iPod. I said, yeah, he said, Steve and I got in a room. He said, I was in charge of product for the iPod. We got in a room and said, what has to be true about this product? And at the time, all the music players didn't have many songs and they were really janky and clunky. So we emerged and

said, we want our music player to have a thousand songs and it only takes four seconds to find a song. That was the total product definition. They came to the engineers and the engineers like, we don't know how to do that. There's no, there's no hard drive that'll hold a thousand songs. And there's no software that can find it in four seconds. I said, exactly. That's what we're going to

two things that matter, or the three things that matter, then you can focus yourself on building that and your first signal is going to be people rave about it. And if they don't rave about it, then you haven't gotten those two or three things right, you can go back to the drawing board. Right. So if people, like, what if you've had, like, how about all those times? There's a really great product, but really terrible marketing. Yeah. And it does happen all the time. You're absolutely right.

Like, I noticed this, like, it's not always the best product that wins. No, it's not. It's the

people that have sales force that wins. The best marketing's wins. And so we realize, okay, these

“two things have to be true. You have to have a killer product, but you have to have a killer go to”

market. Because that wins. And there's a bunch of examples in tech. I won't name names, but I think everybody listening to this can name names a tech products that are not the best, but they won somehow. And usually that's because they had an unbelievable go to market. Well, no, give us an example of something because this is what you're doing for a living. So let's take Microsoft. Yeah. Microsoft did not have the best operating system, did not have the best spreadsheet. Yeah. You'll be something

called Lotus 1, 2, 3, did not have the best presentation platform, the best, the best word processor. But the amazing thing that Bill Gates had beside him was a guy named Steve Bomber, who could sell ice to ask him out. The guy's unbelievable. And he built a sales force of unbelievably count talented and capable people. And so Microsoft's a great example of not having the best product, but winning market share like crazy. They don't have the best cloud Amazon does, but Azure's doing just fine.

They don't have the best office suite. You could argue Google does, but Microsoft's enterprise sales force crushes Google's enterprise sales force. And so oftentimes, like you got to have killer go to market to actually win. Absolutely. And so we we constern in both of those things.

So really what I'm gathering is that the most important skill to scalars or to grow a business

is sales. It has to be able to sell. Yeah. Eventually, you've got to be able to sell your product. And the end of the day, you can say anything you want about product being wonderful, and it's being great. And this being wonder, I don't know if you can't, if you don't have the sales team that can back on sell, you're big trouble. It's true. They're really, it really is both and it's not even the roar. You've got to have both great product in a great, great kind of market.

Or what you just said yourself is like, you can have a mediocre product and still win. You can win if you're, if you're, if you're competitors, think it, go to market. You can win. I know a lot of things that I'm like, wow, that's like, I found this like, like nothing product that's so much more like this dominating. But yet, like, they have no money to market. So nobody knows about it. Nobody knows about it. Right. Yeah. And look, you can look at all the

things on social media, TikTok shop, wrap, like, stuff from China that costs four and a half cents, that like, you have a million people just like pushing this shit, like all these like moms who really could sell sales people, young girl, whatever it is, they're selling millions and millions of shots, like nothing like touch goods, whatever. You get it, you're like, what the hell is this? But they sold, they're selling them because I put the supplement business. Like,

again, it's about having a dominating sales force. Yeah. Yeah. It makes up for a lot.

“It doesn't have to, you don't have to have anything else. Like, you just, but that's why”

when people say, oh, have it, you know, really work on the product product product really. I believe the products got to be good because eventually, your customer figures that out.

No, what I think it happens is people will buy it once and they'll never buy it again. Exactly.

So that's what you just said, you just made that point about Alo. But no, I made that point about Alo, but Alo was dominating the market. They're really good at selling. But if you don't have the product, eventually, like, as you said, people buy it once and then they don't come back. And if they don't come back, you don't have a business. True. So that's why you got to have both. But listen, but that fashion to different animal because Alo has not the greatest quality,

but their aesthetics are really nice. Like, they buy great style aesthetics. So it's like, like you said, fashion, like a, like a, like a, what do you call it? I don't know, or like Zara, because people will keep on buying it because it looks good. And it's like athletic leisure is super popular. It's comfortable. Right. So that's why. But in anything else, if the product,

“like that's why you'll keep on buying that. But in anything else, you'll buy it once and if it's”

really shitty, you're not like a food or supplements is a hard one. You don't really don't taste the supplement. No, and you can't tell. You can't run a test on your body to figure out if it's really work. No, but you can't run a lab test. You can't do that stuff to a lab. And, you know, before you got her, I was with Ken Wright, that we were talking about all the supplements stuff. And if you take some of this stuff to the lab, to the labs and you'll see whatever they're like,

tell like they're telling you, oh, it has this in it. That in it, you'll take it. It's like zero of the of the ingredient that they tell you. Like, you know, often that happens. It must happen a lot because it's unregulated, yeah. It's unregulated. Yeah. Right. So those are bad examples. But like other than that, like maybe some technology stuff. If it doesn't work, it doesn't, you'll never buy it again. Right. But you'll buy it once. And, you know, but like

the product should be good enough. Well, I think like right now we see it in AI because the like Microsoft has this product called Copilot, which doesn't hold a handle to plot or to

I got to use cursor or I got to use cloud code. And in those cases, the best product wins. Yeah, that's true. Well, cloud is, I mean, also, that's true. Microsoft, I agree with you. Like, they're, it's clunky. Yeah. You know? Yeah. But really good sales force. Really good sales

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Okay, well, I don't know how long it's been, but thank you for coming on this podcast. Yeah, it's been fun. Is there anything else that I forgot to ask you that's a really important for like, you know, you talk with this hypergrowth formula? Is there any other piece of, like, of material that? Yeah, I'll give you two. Thank you, go. Yeah. So two, two. Yeah, so one is,

“and I call these the secret ingredients around the algorithm, and one of these, like, will be written”

about in the future, because people try to understand Elon's leadership style and how he actually gets stuff done inside these companies. But here are the two principles. The first is what we call it your own dog food, which is usually your own product. And I can't tell you how many entrepreneurs and CEOs don't use their own product. And if you don't, then you're forgoing a whole feedback loop. I was with a group of banking CEOs, and I said, raise your hand if you use your app on a regular

basis. It's like weekly monthly. Almost no hands went up. And I said, I knew that was going to be the answer, you know, why? Because I use your apps and they suck. And if you were using them, you couldn't live with that suck for one more day. But you don't use them, and therefore they're not getting better, because you're not in the feedback loop. And so we used to take each of us used to take a car off of the end of the factory line every night to go home. And we would drive

the car home. We'd drive it back to the factory, and we'd give engineers notes on the car. And the principle was, we have to eat our own dog food. We have to use our own product. And if we are,

then we're going to be the first to spot flaws. And as an entrepreneur, as a leader, you can't live

with those flaws. Like why would you want to put your customer through that? So you fix them. It's great feedback loop. So that's the thing. One thing too, and this is kind of the genius of Elon, he concentrates on the one or two things that really, really matter in the company. And he finds those one or two things and he manages to them weekly. So let's say I'm on a team that is now the number one issue on Elon's mind at Tesla. I am meeting with him once a week and two things happen.

One is that teams that meet with the CEO don't tend to bring their be-game, that bring their hey-game. And so they're on their a-game almost constantly. And they show forward progress every week. And if you're making progress every week, and your competitors not doing that, you're compounding product or else against your competitor that stacks. And it gets really hard over time to compete with somebody who's doing that. And I think what they'll write about in the

future about Elon's leadership at Tesla and SpaceX and his other companies is this weekly cadence thing that the CEO is driving personally turns out to be a huge advantage builder. And so 10 years on from SpaceX's first successful launch, they now own 90% of space launches. It gets really, really hard for a competitor to keep up with that. Or even catch up with that now. Because they every week are improving the way that that rocket gets built, the way that that rocket gets recovered,

and the way that that rocket gets designed. And it's almost impossible to catch people like that.

“So what would you say that most important quality would be for a leader?”

I think drive a weekly cadence on the things that really matter in your business and use your own product so that you're making sure it meets your standards as a leader. That's so true because people are not using. I see that a lot actually. Unbelievable. Like I just it floors me that people don't use their own product. It's why I insist on driving GM cars even as a board member. And it's why I was in two

I'm wearing a little less. I'm wearing Lulemon shoes. I got a Lulemon shirt on another

Lulemon shirt on Lulemon socks. So I've got, yeah, I want to eat the dog food. How are those Lulemon shoes? These are unbelievable. These are like the most comfortable running shoes I've ever had. What? Yeah. Yeah. And this is a newer product for us, but it's fantastic. You just finished telling me like the core, the core pieces of of clothing. Yeah. It should be the pants. Yeah. But why would they come up with shoes? Because our three core

are three core activities that we running is run yoga and trained. And so these shoes, our customer actually looks us for innovation and shoes. And what we found out was when we started to this a great example, like the algorithm in action. When we said, how are we going to design a shoe that anybody's going to care about? There's a lot of shoes on the market. We said, for women's shoes, how are they designed? So we started to question their requirements. And what we found out was

all women's shoes are designed around a mens foot. Men's feet have like determined the shape of women's running shoes. And so we went out and scanned tens of thousands of women's feet and created the first shoes, like this base of the shoes called a last. It's the first last. It's created for women's foot. And then we launched that product. It's the first

women's shoe design around women's feet. It's amazing. And been done. Really? We just asked the

“question, like how do they get designed? I should try on a pair of those shoes. You should try”

one. Let me know what you think. That's the price point of those shoes. This is about $109. I think something like that. Oh, they're not as crazy. They're not crazy expensive. But what's your cost on them? $8? I know. It's well north of that. But I don't know what the cost of the shoes is. Great question. Do you get free clothing at a little early? I buy it. You do? Yeah, because I want to go through the process. Yeah. You do. Okay. So what do you like? Would you like the process?

There are things I do like about the process. Like there are people that are passionate and stores about educating people about yoga, run, and train, and I love interacting with them. And they're really passionate about the product. Are the things we can improve? Definitely. And we're working on some of those. Would you go to the little lemon? They're looking for a CEO. I heard. No. Well, I'm done being a CEO. No, I'm like now I'm investing in other CEOs.

Yeah. Okay. Yeah. I want to catch you to see for example. Yeah, exactly. If I'd slip up. Yeah, exactly. So no lift again. No, no. No. No. I've got a bunch of investors that I've told I'm going to take good care of their money. So I got to do that. Okay. You want to do that? Is that okay? Okay. I feel like I want to make sure there's like I have my computer with all my I didn't even open my computer to ask you the questions I wrote down. Do you know that? But

but that's okay. I wanted to I wanted to have a conversation with you. I don't like to usually like look at my conversations too. That was super. It's super. It floats super well. Like, I mean, I do right. Did I forget anything else? That's a portable company business. Are you sure?

“Yeah. Because I really like the eat your own dog food. I think that's really important stuff.”

Okay. I want to ask you this because this is a don't-it's a paper that you guys

you know wanted to add me to ask her. Okay. I never asked these questions, but

all right. If you were mentoring a recent college grad, how would you tell them to use the algorithm? Ooh. Right. Just down, don't stand out early in their career. I think when you come in and you can do two things. You can question assumptions and be a simplifier. You're going to stand out. And if you can do those two things, you tend to be able to figure out where the value is and you can add value. So back to the early part of our

conversation, that's essentially how I was able to join Tesla with demonstrate value through simplifying and questioning assumptions. If you do those two things, you can apply the algorithm and I think as a recent college grad, you can become very valuable and stand out from all your peers. So I'm going to ask you one more question about this because I know I've kind of asked you seven different ways, but what is your superpower then? Like you obviously can make the common sense

seem like you know like you're picking up on like things are very obvious to some, but obviously not that obvious at most. You go above and beyond. You like kind of like show your value all those things. But what's that one thing that you're like software we got? With all that being said, what is your superpower? It's been able to simplify. I think that's it. Like it's a skill. It wasn't someone I was born with, but it's something I learned over time. Yeah. Yeah. So you just such a good job

“at it. So important. Yeah. Because I think once you become a leader in people looking to you,”

they need you to be very clear about what the goals are and what they and what we're trying to accomplish and to do that, you have to be a simplifier. Can't take a lot of words. I love it. Okay. The book is called The Algorithm by John McNeill, who is just like a super impressive. I mean, your background is insane. Been super lucky. Yeah. Okay. Lucky and hard work. It luck doesn't just

the way they're prepared. Yeah. Exactly. Yeah. So thank you for being on the podcast.

Thank you for having me. It's been fun. It's been so fun. And we're also going to find more information

“about you if they work. I think you can, uh, you can find the book on Amazon and, uh, and the book”

or the audit, the, the audio book, and you can find more about me on DVX.fentures. Amazing. Thank you so much. Thank you.