Gokul Rajaram - Lessons from Investing in 700 Companies - [Invest Like the Best, EP.456]

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To learn more, visit psum.vc. My guest today is Gokel Rajuram. Gokel is one of the most prolific product builders of the last 20 years. He's built the core ads and product businesses at Google, Facebook, Square, and DoorDash, working at each company during its most formative scaling periods. Alongside his operating career,

Gokel has invested in more than 700 companies, giving him an unusually broad view into how products are built and scale. This conversation is about how product building is changing with AI, and what remains durable when software becomes increasingly cheap to create but hard to defend. We discussed the one thing Gokel believes is truly future proof in AI, while companies like Zendesk and Slack are more exposed than Salesforce and Netsweet,

and the few sources of defensibility. We also talk about everything Gokel has learned from helping

“build the most important ads businesses, including the only three ways an ad business can make money,”

how those constraints, shape, product decisions, and what consumer behavior change threatens every major platform. Gokel shares lessons from working closely with Larry and Sergei, Mark Zuckerberg, Jack Dorsey, and Tony Shoo. And what he learned from watching each of them build generational companies. Please enjoy my great conversation with Gokel Rajaram. I thought it would be interesting to start with the changing nature of how people are building

products. The biggest story by far and technology seems to be Claude Code or Claude Coerke as well. The ease with which both technical and non-pectoral people are able to build something that they can imagine. It seems to have been just a complete explosion in their ability to do so.

You've built a million things. You've invested in 700 companies watching people build things.

You're about as prolific as they come as a product person. Maybe just give us your state of the union of how the world feels to you in terms of technologists building products and how fast that's changing. What is interesting about product development is that 10 years ago or even five years ago, there were very clearly defined roles. Product managers articulated what to build, designers, designed it, and engineers built it. Over the last few months, I've been talking to many companies.

But over the last two months in particular December and January, December 25 and January 26, it's become very clear that something has fundamentally changed. And what that thing is, is the notion of a long horizon, a long-running agent. I've experienced it myself about six months ago. I tried to use cloud code in the early days to build something. I call it a video

Ultimately, I gave up. Two weeks ago, while watching some episode of some TV show in one hour,

I was able to basically front my way to a good video transcription tool. Because these agents now are resilient to failure and you don't have to be very technical to use them. This changes the expectation of product teams. After I did that, I started talking to three kinds of companies. One, hopefully a few years of companies I've invested in, second, the large AR labs, and third, a bunch of AI native young companies to see what the similarities are between them.

A few things that emerge. First, product development, as we know it, is changing because the models and the capabilities are growing so fast that if you try to be very strict and stringent about describing exactly what you're going to build, or prescribing what you're going to build, it is going to not work. So, almost everybody has gone to a bottoms up approach, where it's not

“doing a product management anymore. Product managers, the only thing they do now is they articulate”

what the customer needs are at the highest level and then they're the guardian of the why. But the actual product is built bottoms up by engineers researchers and product managers and designers all working together on the code itself. So, capability is in models are changing very fast. Whatever you think of six months ago, if you continue thinking on that dimension, you're fallen behind. So, it's very, very important for the product managers to be understanding

of what these models are capable of and to be hands on. So, they sit with the engineers and the researchers and write code, do prototypes, do anything and everything it needs in a hands-on way.

The first thing we are seeing now happen is that PMs are starting to check in code with either

the code x or plot code into the actual production repository. Right now, engineers have to review the code, but you're going to see the plot code, code x and other tools actually review the code itself before engineers come in. So, all the companies are struggling with how to evaluate these people. Earlier, there was nothing called the prototyping interview. Now, there's explicit interview in the interview loop called prototyping. Literally forces product managers to be hands-on.

Second, the product manager and designer role are merging increasingly. So, the designer role is an interesting role in particular. A lot of companies are going through head count allocation this year and I'm hearing from many teams that when given the choice between an expert designer and extra engineer, they're saying, you know what the design systems are already laid out. Now that we have the design systems already laid out, we can use AI to do work around these designs system. So,

we may be a small number of designers at a company level to manage a design systems and the design language, but AI can leverage the design language to design. So, please give us an extra engineer. So, the number of designers and product managers, the literal number of engineers, when I was growing up in product, it used to be 1 to 3 or 1 to 10, it's going to 1 to 20 now.

“And then I think the other very important thing that's happened, which is fundamentally different”

this, when I was growing up, products were deterministic, where there was a workflow, you knew if user did X, Y happened. Today, you could do X, Y happens, but if you do slide relation of X, something completely different happens, non deterministic software. What that means is, you have to be on the other side, an evaluation or what is called e-wales in AI. And someone has to evaluate whether or not what the software is producing is reasonable or not across very

use cases. Obviously, there can be human e-mails, AI e-mails, etc. But who owns the e-mails? It's the PM's, it's the PM's and the researchers. So, the PM's job is to be very clear at a high level of what the user needs are and then have a very clear sense of whether this product is good to ship or not, but evaluating it. Oftentimes, you got to write AI yourself to evaluate the results of AI because humans can't. So, PM's are doing good at coming up with evaluation techniques,

it's the non-determinism of software, the speed of the things that are going and overall the notion that the capability frontier is being pushed out every two months makes it an incredibly challenging, getting can be exciting. If you think about my friend's act as a great way of thinking about AI, which is, we have the Industrial Revolution for goods and that

basically this kicks off an Industrial Revolution for services. This interesting opportunity to ask

about what your philosophy of product is. Your such a product-centric person and builder that's

“what you've done, that's what you've invested in. As we face down this Industrial Revolution for”

services, what is your modest possible philosophy of product as we enter this era? Very simple, a product person, a product manager, if you call them, their job is to balance customer needs and business needs. The product manager, there has to be somebody at the company who's the keeper of the Y. Why are we building it? What customer need are we solving? Why is this a pain point? How intense it is? How deep it is? And second, how does it add value to the company?

balancing those two is a very delicate act. You can build something amazing that as a tremendous

amount of value to the customer, but doesn't build any value to the business. And you can do something that is awesome for the business by racing prices, but it's value-detracting for the customer. So balancing customer needs and business needs are the highest that is what I think of the product. And what it comes down to, in my opinion, over the last 10 or 15 years, I've really gone down to this notion of outcomes. Outcomes, I think, are what defined the best product people and

outcomes have to be defined in the form of customer behavior, because customer behaviors are leading indicators for every business outcomes. If you think about it, the simplest thing that a product does is to make somebody go from not a customer state to becoming a customer state. And from becoming customer state to becoming a loyal customer, and then maybe to becoming a loyal customer to become a paying customer or if you do a poor job, it becomes a becoming a loyal customer to become a

churn customer. So these are all behaviors. Everything you do of build should be attuned to the goal of what customer state change does it need to, what customer behavior

which it does need to. So I tell every CEO I meet that is trying to hire the first PM or

“doing the first product review. You need to ask why? The only question you need to ask is why,”

why are you launching this feature? And you should not let any feature go out. If there's not a clear hypothesis behind this feature, and the hypothesis has to be articulated in the form of a customer behavior change. We believe that by launching this thing, the customers will go from doing X to doing Y or from spending X minutes a month doing this to Y minutes a month doing this. You have to have hypothesis, which is grounded in some data or something you know about the

customer, some secret of the customer. You mentioned at the start the difference between the video transcriptions to all six months ago versus more recently and how quickly that changed. It's just such a hard future to reason about, given the pace of change. So how do you reason about it? Is there anything that can be truly future proof? Yes, the one thing I think that's going to be truly future proof is judgment. Why? Because what is the biggest challenge you have?

When you have 1000 AI engineers writing code, you have the big challenge of AI Slop. Every product you have talk to is extremely worried that because of these engineers running rampant, they're just going to produce lots of code. Which of the code is even valuable in an era when you can do everything? The question is which of these things matter and you should truly do. On the product side is judgment or what needs to be built and evaluating the output. On the

engineer side is evaluating the code because if you don't understand what the code says, I think you can have AI engineers writing beautiful code that could be wrong, that could have bugs in it that could be vulnerable. Someone needs to review it and make sure you have to have

human review at some point a special critical code that is in the core of your system. And similarly

“in design, you have to have judgment around, does it make sense in the broader design system?”

So I think this judgment is the number one thing that humans are going to bring. And of infinite productivity, the question is what are the things we productive on and are building the right things? As your business scales up, everything gets more complex, especially your compliance and security needs. With so many tools, offering band aids and patches, it's unfortunately far too easy for something to slip through the cracks. Fortunately,

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firm. Schedule a demo at RidgelineApps.com. As you evaluate companies today, build things yourself and just think about the trajectory of these tools. Maybe walk through how someone should think about building an AI application. There's so many people excited about. It feels like a gold rush with this new technology. So many things that we can do that we couldn't do before. Or things that specific people couldn't do because they weren't technical that they can now

“do. How should people think about building an application using AI starting today?”

First and foremost, you've got to start with the deep and compelling problem. The good uses, there's a tremendous, some of the deep and compelling problems today. Every vertically in every industry, why? Because till today, till recently, software was used more as a tool by humans. We finally have software that is a genetic nature, which means it can do the job of people. With question you have to ask is what industry are their roles

by software. Every three months the answer gets deeper and deeper. You couldn't have told me that a designer's job could be automated by AI. Six months or nine months ago, you could have told me that an architect shop could be automated by AI. A lawyer's job could be automated by AI. It turns out increasingly in every vertical, these capabilities are getting better and better.

“So you want to start with what industry do you want to be in and what kind of job do you want to do?”

Second, you want to target a high value workflow. You want to target a workflow that is deep,

that is complex and that requires custom data. I think one of the challenges with this whole space is that the models are becoming so good that if you try to build a company that is light, that is not a hard problem, the foundation model companies are going to eat you. I met with the CIO of a fortune-funded company a few weeks ago, was asking him what a few startups had invested in and worked with. He said, look, I don't know why I would use any of these startups. Gemina has

an agent builder product and I also use Chad GPD enterprise and they also have an agent builder product. And I have a thousand IT engineers who worked for me. They all want to be retrained as AI engineers. So I'm just going to put them using these horizontal tools to build my AI agents by reading

startups. And so that's the kind of thing you're going to face. That if the CIO of a company of

your target customer can build what you're building using these agent building tools, you're not going to be successful. So you've got to really go one step ahead of what can be built a multiple subs ahead. And you've got to extrapolate to where can the capabilities of these agent building products where you've got to do something very, very different. So what that means is you've got to have durability because ultimately as venture capitalists are even as an entrepreneur, your

time horizon can't be building something that lasts for one year. And that's the biggest challenge. They start building an application. It's building an application that's durable. That basically

“will last at a start. And I think there are a few things around durability. One, you need to have”

ownership of a scarce asset. A scarce asset could be a license of some kind. It could be a regulation of some kind where you have unique insight into it. Second, you might need to provide basically own a control point. A control point is a thing that controls how people interact with money or with data. Third, you want to maybe have hardware which is hard to replace. Fourth, maybe you want to

be part of an essential workflow. Fifth, you want to have network effects. You want to think about

those things and figure out how after you take on that workflow, you can make it more durable. And finally, I think your ambition has to be to replace the entire system. In other words, increasingly, what is going to happen and I'm seeing this more and more is every vertical has either a legacy or somewhat new, what is called a system of record, which is a system where most of the data is stored for that system. For example, in legal there's a company called

Filevine or another company called Clio and sales it sales force and health care it's epic. Now for many years, these companies all had APIs. If you enter the industry, you could build an agent company on top of these APIs. In 2020, things changed. These companies started seeing that these agent companies, AI companies that are being built, they are starting to take on the functionality out of these companies and are treating them like a dumb database. So, you started

seeing last year that these companies are cutting off access to APIs. Slack has done it most publicly, Slack has owned by Salesforce. They cut off access to gleam where gleam can no longer access Slack data. And the reason is they don't want gleam to build on top of them and then slowly suck out the value that Slack has. And I'm hearing from other verticals that they're doing one of three things. They're blocking access to APIs. They're offering their own agents for

“free bundled. I think that is a great and effective strategy. Or they're charging these AI”

agent companies to access the data. Let's just access the API fee. They're saying now it's $2 an API call. They're trying to make the model of these agent companies unviable. I think it's going to be very hard for a end customer to use multiple companies where you have a system of record. And then you have this agent that sometimes doesn't work with it properly. So, the agent companies have no option but to also start building an offering a system of record. So, every company

I know is now trying to figure out how do I build the entire platform and not just the system that does some workflows. I think last year even as like, "Oh, we can do workflows. We can build what is called the system of action and live on top of the system of record." I don't think that's an option anymore. The Slack examples are a good one of last-generation software company which was very big and very successful. One of the most interesting and best-requestions

and I'm curious for your answer from the perspective of a builder and a technologist is that the degree to which these horizontal model companies are going to destroy or be very bad for

that has features that you want for your company and it's very reliable in all those same ways

“that Slack is and therefore Slack's in a lot of trouble. How do you think about that question?”

Obviously public markets seem to think software's in a lot of trouble. The multiples are really, really low. How much would you be worried if you ran a good solid but older software company today? There are two kinds of legacy companies. One are systems of records and one are things that are price based on outcomes. The software companies that should be the most worried right now is where they are pricing the product based on utility. Zendesk is a good example.

Literally Zendesk prices seats and each seat comes with utility. In other words, each seat corresponds to a customer service agent that tax certain number of customer tickets. So that company should be worried because I can have an AI agent sit right next to Zendesk and you can slowly siphon off instead of paying for 50 Zendesk seats. You can pay for 20 and I can have 30 AI agents sitting next to Zendesk and that's certainly can happen more time.

You don't have to have all in one decision. It can be a two-way door decision. Those are the most endangered companies in my opinion. For these companies, you need to change your pricing won't be based on outcome and you need to actually build the product to be based on outcome. It's easy said that done because literally you're going from a 20 or 30 dollars per seat to maybe charging a buck or 50 cents or 20 cents per ticket result and you don't know how that's

going to turn out. So you've got to change your pricing model and I think that's a very challenging

“thing. That's why I think many of them probably need to go private because they have to make this”

business one transformation in private. I think it's going to be hard for them to say public. The company is at a less exposed once whether utility is not based on seats but it's based on data that's been collected and captured over a period of time. The more timeless the data is, the more protected they are. Slack for example I would say might be in a little bit more precarious said because the data in Slack is not timeless. Half life is very short but if you have ERP is a great

example. Somebody uses net sweet as an ERP. Now I don't know how net sweet actually charges but it

doesn't matter how many seats you buy. The reality is it runs your whole business and there is no

compelling reason for someone to put the career you'd take by ripping out net sweet. I know over the last year there's been a lot of AI enabled ERP businesses but there is no compelling reason to take net sweet and say I'm going to rip it out because it is career limiting to suddenly take net sweet out when you're a company running on net sweet. So I think those companies are much more insulated and I think obviously and you could argue that net sweet has more time to be AI agents

and top of it because they had the data. They can train the AI's and top fit in one lit so essentially I think the software public markets are not distinguishing in these two types of companies, companies with a half level data is low and where you can actually have, you can literally take half of the value of this company and put it onto an AI company that sits next to it. Well something like an ERP system or even sales force for sales data and records, those are real customer records.

It's going to be hard. So what an iterative company is doing. The first thing you've got to do

if you ever have to compete against them is you've got to spend a year or two first building, a system that literally takes migrates your sales force instance to your own company's platform. One of my companies is an iterative company. They literally hired engineers in the European

“countries for two years to build this migration then transition tool. So you have to build the”

migration tool because who's going to migrate it? You can just present your banking system but this data is still there. Even for square for a small business I remember they had a point of sale. They wouldn't move to us even though it was cheaper because they had gift cards, customer data, loyalty data, payment data, all of that even credit cards. So we had to build scripts and that took us months or years to build it for a simple POS. For something like sales force

you can't just say am I much better CRM? If you look at CRM what is CRM contained? It contains your customer record. Your customer support system contains what your customer is a complaining about. And G-R, at least here, contains what your part of your elephant team is building. Now all of these say should be linked because there is no linkage. You should be addressing the biggest complaints of customers which are in Zendesk and those Zendesk customers you should know

where they came from, who bought them, who sold them. So all these three systems should be linked together whether they're all three different companies. They're companies, they're in unified these things and it's a great value prop. But guess what? None of your customer is ever going to move unless you build a simple seamless way to take the sales force data and move it to your instance. The data from G-R and move it to your instance is Zendesk and

move it to your instance. So literally it's a two year effort to build migration otherwise, you've got to get an extension. How do you think about stickiness in this era just as a general concept when the friction for creators to build something that new is so low? You can do whatever you want really fast. How is anyone going to use anything for a long period of time? In the age of AI, stickiness I think comes from a few sources. One, you need to have nitric effects.

of restaurants and dashers and consumers. So you're going to attack one, you've got to go,

you can't vibe code your way to those. Exactly. And so nitric effects. The second example of

stickiness is when you have financial or money moving through. I think that's another way to be sticky. Many of the system of records, for example, toast, have payments going to them. I think that really is interesting because you can't just start building the point of say, you also have to have money flowing through it. And I think if you look at the banks, banks are a good example. Once you have something like mercury, as a business bank, your money flowing through it is

hard to then switch because you have regulations or other stuff embedded. So I like things that are a combination of financial services and software because of that. The third stickiness is from hardware. You can actually have hardware. Toast is a good example, where toast gives you hardware for free,

“but if you try to return the hardware, you have to pay them. But either case, the hardware is there.”

And somebody can't just build software. They also have to take hardware and put it into the thing and rip out the toast hardware. The fourth one is access to a unique asset. I was thinking what a good example. And I came up with an example of Sierra, which I think unique asset is bread tailor. I mean, they have full control of bread, who's one of the best salespeople, chairman of open AI. You can make a call to any company, any country, and they'll take a skull.

You can't really outsell bread. There's alpha in that. You need one of these four or five things, which are basically indicators of durability. The half-life of software today is so short that I'm going to see one of these things that make it durable. Harrison Hellman has this thing called seven powers. And so you've got to have a few of those seven powers that basically are embedded in the business model from big one. You've been so lucky to work for some of the most well-known

CEOs and founders of this modern era. I'd love the chance to ask you a little bit about each of them and what you learned from them. And then more generally, just things you've learned about what great leaders do to run companies, but maybe going all the way back to Google and starting with Larry and Sergey, what did you learn from watching them operate and lead? Another most interesting thing about all the leaders that I've worked with with the

Campbell-General companies is that they have a superpower that is very aligned with what the company needs to succeed. And the company was really shaped in their image. The company, the culture, the early hires, the products, during Google in 2003. The first product I got exposed to actually, which I didn't know about was a product called Caribou. Caribou was an internal codename for a product that was launched in April 1st 2003, publicly it was called Gmail.

It didn't believe that it was for existed because in the internal alpha, it said, this gives you one gigabyte of storage. Back then, remember Yahoo Mail was a dominant product and it gave 10 megabytes of storage. So this thing had a hundred experts storage. And this really epitomizes Larry and Sergey's philosophy, which was basically built the best technology on the planet. They were deeply technical and every product was held to technology and scale.

“And I'll never forget, that sense was the fastest growing product in Google history and we went”

in to reviews and Larry would be disappointed in us and we asked why he's like, what percentage of all ads on the internet are you? Less than 1%. He didn't care about the revenue he cared, the Google is involved in serving every single ad on the planet versus making a business of whatever

a billion or two billion or 10 billion. So the focus on scale and the focus on technological

superiority and that investment, Google Street View, keep you use way more, all of these, I think show the 10 plus years of investment to an uncertain future, but knowing that if you invest in technology, good things are going to happen and good things happen, but it took a decade and that's investing in technology capability. Before we leave Google, you had this interesting idea about communication and Eric Schmidt, obviously another key Google person, keep tell the story about

him presenting the company strategy using nothing but images. This is an interesting example of communication. Eric would give a product leader, we would become seconder to Eric for the weekly strategy or the annual strategy planning session. So I did, I think in 2007 where my job was to go to Eric and say, Eric, how do you want to present the strategy of the company? He's like, well, it's very simple. I want you to go and interview each of the different leaders of the different teams.

There's only one constraint to have. I'm like, what is that? You can't use any words to describe

“what they're doing. I'm like, what do you mean? You have to use words. No, you've got to use only”

images. I'm like, why is that? He's like, people don't remember words. They remember how things made them feel. And you can put words in the speaker notes, I use, but I want you to come with the most compelling image that exists for what they're described. And so it was a crazy thing

because I never thought of doing a presentation that way. So I went to each of the businesses,

AdWords, Search, YouTube, AdSense and then had to come up with a compelling image that was

specific image? I'm so interested by this exercise. It seems potentially productive for anyone to try to jam with or try to say into only images. And so I'm trying to pin down an image and how you arrived at it. For YouTube, it was a graph that showed the number of videos being uploaded every second, how it had changed from the time Google brought them to them. So it was not even a graph

that was literally showing this incredible hockey stick that happened over the last 18 months.

And then it had, I think we could even show the numbers. So the thing had to be compelling enough that is the line. The line would have to be like a U or something like that, but it went like

“that. It was just showed like this. You have to say something, 100x or something, but you couldn't say”

that. Google search appliance, I think we wanted to show that Google search appliance has gone from being used by small and mid-sized companies to being used with a large company, the planet. We showed the logo of very large Fortune 100, a Fortune 50 company that they're acquired. What is your own freezac? Zuck was, and is actually, I think, the greatest mind on growing, building growth and engagement and building consumer products broadly. I've seen him basically

sitting in a room and critique a product team would have come in with a very well thought out, consumer product flow. And he would look at the flows and it's say that is not going to be compelling to users. That is not something that a user is going to engage to, change it to this. And you could say, my God, why didn't I see that before? So he's very, very good at thinking about how consumer products should be designed to maximize engagement and maximize, just growth is

“probably the best way to put it. The second thing he's amazing at is learning, my following.”

When I joined my task was to lead the ads product team and Zuck at that point knew a little bit about ads because he had worked with Cheryl quite closely. Cheryl had worked on ad before. But then within, I think about a year, he shadowed us. He came to the ads team. He basically sat with us. He came to Ben here for meetings. And within a year, he got to the point where he was generating ideas for the ads team. One of the most foundational ideas of Facebook ads came from what is

called custom audiences. Custom audiences is a foundation of most ads systems now. It's the idea that as an advertiser, you want to reach people who are similar to your customers. So if you're a bank and you have say 100,000 customers, how can you give this set of customers to your ad platform and say, look, instead of describing these customers, what did ads do before? They would describe their customers. I think they are 25 to 35-year-old women. That's not good enough.

Instead, if you can just tell us who your customers are and you can add it to our users, we can then find people similar to them. So uploading that data into our system securely

and doing it in a way that doesn't compromise any PIA. It was the key thing. And it all came from

Zuck, how? Because Mark Pinker saw the CEO of Zingar. Zingar was the largest advertiser on Facebook. So Zingar basically wanted to, like most gaming companies, they were very focused on acquiring Wales. Because Wales, for any gaming company, casino, et cetera, 80% of all revenue for any gaming company comes from Wales. So he was very frustrated at us. We would do these quarterly reviews with Zingar on the ad side because there were a lot of spenders and ads and they were constantly

being yelling at us saying, we want to get more Wales. We were like, yeah, you're getting users.

“You need to figure out how to get Wales from your game. What do you want us to do?”

We're going to help you acquire users. So he once, I think, Zuck and Zuck came to us and said, why can't it just upload their Wales into our system? We know who the Wales are. Why can we just find them people similar to those Wales? We were like, that's interesting. But we actually didn't know who the Wales were. So they needed to tag it for us, who the Wales were. And basically, we started doing it similarly. We started finding users similar to the Wales that they had.

And it worked so well. Let me said, why don't we take this approach and use it for other types of customers who we didn't have data on. It became truly a transformative thing for ads and those all Zuck's idea. He just has something about making connections between disparate domains,

which is pretty amazing in your make. What did you learn from Jack and Tony? Jack is,

I think, on part with Johnny Ivan's, Steve Jobs in terms of his thinking, we're designed. I understood what good design means. Good design doesn't mean visually pleasing. It means a product that is designed so well that you don't have to give your customers a manual on how to use it. They should be able to see the product and use it. Think about your point of sale. Every point of sale, except square and things that have copied square, you have to train a

barista still for several days after he joined and how to use the point of sale. Square is something you can download from the app store and start using it as a point of sale to run your business. A category where you have to train somebody for weeks. That's the example of a good design. He brought that to every part of the company and removing friction from waters. Traditionally, I mean, squares whole premise was removing friction from small businesses, applying for financial

things that I didn't realize is that square at its goal is a risk company. When you applied to a bank for payment processing, in fact, the company was founded because Jack's co-founder Jim was rejected many, many times to accept amics by banks. He was a fairly successful glass blower in St. Louis and he basically was selling $23,000 glass sculptures to people who would send him checks. So woman called from Panama one day and said, "I want to buy this on his website here,

this beautiful piece of glass is a great, they agreed on the price." And she said, "Can you take my credit card number?" He said, "I don't accept credit cards." So she said, "Sorry, I can't send you

travel insect." So he lost the sale. And so he went to his friend Jack Dorsey. They had never

built hardware. They never done any of that stuff. But they reinstalled and realized that the iPhone, which I just been released a couple of years ago, had this thing called the audio jack that could be used

“to put a piece of hardware in and process cards. I can't even imagine the leaps you have to make”

together. But the number one thing that they realized is, most small businesses are denied by banks when they apply. Square and said said, "We are going to accept 90 percent of people could what they did was they put risk at the transaction level." So they accepted you as a person as a business. But then once you started processing transactions, they would then run machine learning once and every transaction, this transaction risky. This is not. They shifted the level.

And so that kind of lazy, but brilliant onboarding is something that characterizes a lot of

good things. Serge very similar. We were going to launch at Sence in 2003. I never forget this.

We were doing our final launch things. Serge was a sponsor. He came and sat in the meetings. He said, "What are you guys building here?" We're like website publisher. We're going to apply from all across the world. It's a self-supported product. We have to review them and say, "We should approve them, not approve them to run at Sence." He's like, "Why do you need to approve

“them?" We're like, "What do you mean?" Our ads are going to be running ads on these things.”

Google ads. Or ads part by Google. You don't want to be on a porn site or something else. It's like, "Why not?" We're going to have a good answer to why not. It was like, "Well, standards or policies. But what if they lie?" He was right. What if they lie? We had so many people applying with 90.com for example. It's true. It was very hard to know who owns a domain. I could apply with your domain and get accepted. He was right. In some ways, we were just doing it

to cover her assets turns out. He said, "Kill all this." We had literally spent half of our engineering team building this complex approval system with ops and so on. Ops are super excited. There are a lot of people. I was telling him not to do. Instead, we didn't do it in real time. For every page that loads because we had the JavaScript on it, we know what you are at it is. Look at the content in that point. It's too slow. We won't be able to look at the content

because it's billions of pages. That's fine. Let it go for 100 times. After 100 impressions, if any URL hits 100 impressions, then start doing it. It actually makes sense not trying to put lots of checks up front, but being in tension would wear. And why most things don't even get to

the level where you care about it. In both these amazing examples, and then you also said the jack

would do this across the company, not just in the product. How would you sum up the process of great design that you've observed from the people that are the best at design? What is the method that they're going through over and over again as they apply? It's a different parts of the company or product. The number one thing I've seen is they tried to minimize the number

“of steps. Everything should be in one page, and you need to cut down things. In fact,”

jack called the product manager or product editor. Why? Because he believed rightly so, the role of the product manager is not to add more features. Any of us can look at the product and say, here's 10th thing you should build. The best designers, the best product people, edit down things. Similarly, we have 100 features. One of the two things that really matter that will drive the customer outcome. So the best designers really is to take 10 pages of design

and say cut out all the experience. So I think it's the process of editing. And this goes to judgment. In an AIH humans with amazing judgment, which is really editorial capabilities are the ones that are going to do well in flight lighting. Apparently Rick Ruben would say that it wasn't a producer. He was a producer. He was a producer. He made an example of producer. I like that. Your finance team isn't losing money on big mistakes. It's leaking through a thousand tiny decisions

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for Wall Street connected to your data, understanding your process, and producing real outputs. Check them out at rogo.au/invest. I wonder how that applies also to communication?

a leader can send to his team on a weekly basis, I think. It seems like this idea of reducing and simplifying can be applied in so many ways by great leaders. Talk about it in terms of communication from leadership to a team. One of the things that people, especially founders of startups, don't realize this. Initially, most startups start with two or three people, and then they go to people who are all sitting in the room together. Everyone can hear what you're saying, but as

soon as a company goes into, I think I call it two rooms, where they're not in the same room together, then you have to communicate. You have to let people know what's going on. And there are few artifacts that companies need to start putting the place. One is a notion of an all-hands. It seems cliché, unnecessary, but even with the 15-20-person company, just getting together once

a week, and basically just sharing what people have built to have been working on in a way,

and then having the leader address everyone or one of the leaders address everyone, it's a great way to get people together. The second thing is a weekly CEO email, and I think this is a very

“powerful way for the CEO to get across to the team, what is on their mind. The best way I think is”

that I've done myself is during the course of the week, you start jotting down things that you think you want to communicate. And then you spend Sunday taking all of those things and adding it to two or three things that matter that you want to get across. Most businesses, I think, can be communicated along three dimensions. Product, business, and team. What's happening in the product? How's it becoming more remarkable as selling a customer's better? What's having the business

side? How are we doing better as a business? And then what's happening in the team front? Who have we added subtracted? What changes have we made? And most importantly, don't be afraid of repetition, because repeating it once twice, twice, twice, four times. That's when actually it seeps into their bones. What is the literal format that you do in your email? What is the structure that you do personally? I've used in the past and wanted to recommend in what people

I've seen. Now I've seen at least 15 CEOs adopted and to good effect is three sections. One is called pop of mind. So this is product, business, and team. Does it need to be all three? What's keeping you up at night? I think this is the thing that literally everyone is hanging on to. I mean, because I remember seeing it from Jack from Mark from Cheryl seeing it put in paper or put in an email,

it's just so powerful. That's one. The second thing is for performance update. I think everyone

wants to truly understand how the company is doing. How is the company doing on the dimensions? This is where especially being a starter, I think most people are one dimension removed from how the company is doing. They all want to know that they're doing well. And I think this is the way. And the third is miscellaneous. These things like recognizing specific people. It's quotes from customers.

“It's maybe an off-site announcement. But the most important section where you should spend”

60 or 70 percent of the time on is top of my. How transparent should one be in that? As a leader of business, I can tell you it's top of mind, but a lot of it either might be sensitive or I would worry about scaring people or worrying people. That's something that I'm thinking about or worrying about. What keeps me up at night might create stress in the business. Where should one draw the line in terms of how candid they are? I've put you think more candid is better than less. Why?

Because if you're more candid, you can actually ask people to suggest ideas. If you have good talent at the company. If you actually ask them, what do you think I should do? What you think we should do in this situation? I think people will rise up to the occasion. Especially in the company is small. We want people more important. There's a one-way road decision that we're going to make. We're making it takes as one way or the other. I think it'd be great to get feedback

from more people. I want to talk about ads and everything you've learned about building an incredible

ads product. You've built the two most important ads system. When I always say as a company,

you either die or you live long enough to become an ads company. We're seeing now with open AI, it's happening. How do you build an ads business? There are three fundamental ways to succeed

“in the ads business. Three, and only three. One, you need to own a very coveted group of users”

and you need to have a surface on which those users interact. Google search is a great example to surface on which a very coveted set of users interact with. Obviously they're expressing intent. So Google is one of the most profitable ads businesses. Facebook, very similar, it took us a while to figure out what was coveted about these users. Turns out what is coveted was the identity. We knew who these users were and we could match them to customer and other data.

And so you could precisely target these people with messages you wanted. And you could find people similar to that. Chad GPT, their combination of intent and identity data is untaneled. I mean, Google had intent data but our identity, phased with identity, were intent. These things been boot together. It's the dream of any advertising person. And these are complex multi-phase searches. That's the other beautiful thing. You search, then each of the queries is kind of like a search.

And then you search again. And you're just building up searches at Google. You typically search. And then you lose the person because they go off and click and you don't hear. These are natural language

Where you have to own a first party product. You have to be the first party. Second, you have to drive outcomes. That's another way of making money. Where you don't own any inventory. But you can drive outcomes for advertisers. The best example of this is a company called Apploving. Apploving is

a hundred plus billion dollar company. They drive one outcome really well. Mobile app installs.

And I don't believe that people need that kind of mobile app install stands out. Everyone wants to get mobile app installs. It was initially only restricted to gaming. But now every mobile app where they solved one mobile app installs. So Apploving has built a massive infrastructure. Now they control the buy side. They control the sell side. They even control the middle of it. So you could argue that they control the auction for most mobile apps in a way that

almost Google used to control or people say they control for the web. But Apploving has built an amazing engine to deliver you mobile app installs at a certain cost. So that's the other way to do it. You deliver an outcome at a certain cost. The third way to do it is if you are the exclusive provider for a large advertiser or a large source of demand. A good example is a company called the Trade Desk where Procter and Gamble for example go through Trade Desk and say I spend the

Google, I spend with Facebook, all my other display budget, Trade Desk here you go. You can figure out how to distribute and how to run it. And so those are the three ways. But you've got to be exclusive. Those are the three ways that you can make money. No other ways of making money. What business

“ideas don't work in advertising? What are the business models that just are doomed to fail?”

Trying to be a middleman on top of these large platforms. From my understanding, Trade Desk, I know, doesn't work on Google or Facebook at all, doesn't work with Google or Facebook

as a first party. But Apploving, I think only little bit works on Google and Facebook, mostly they

do their stuff on the unwashed web basically outside. So you've got to stay out of Google and Facebook's equals systems because if you're trying to build your business on top of Google and Facebook or probably soon open AI as an ad company, you're going to get squeezed. Every time you build a new capability in top of Google, it turns out Google learns what you're building. And Google has the best engineers on the planet, so to Facebook, they will take your capabilities and cover it to their

platform. Let's see if I'm proven right or not by my take is that there's going to be almost any cottage industry of companies that are going to come and say I'm going to help you optimize edge and edge equity. And there's already companies that help you optimize placement in what is called these answer engines called AU instead of SEO. All of those are not going to create to it, but they're going to come. What would you be worried about if you were one of these fairly

monopolistic owners of a massive ad network like the ones we've discussed? We get their Uber and Amazon in the mix, start ash, Facebook, Google. If you were there running their ads businesses, what would scare you? Consumer behavior change, where they don't open up the apps anymore, but they use agentic interfaces. They use AI to face which are not owned by my company, this company to do their transactions. If you assume that a big percentage of things are repeat,

then could you put those repeat things on autopilot through an agent? You never open the app.

And so you lose opportunities and then advertise. And you lose the relationship with a customer over time because the customers are trusting the AI agent. You can't bear your head in the sand.

“You have to go and experiment. That's why when Chad GPD opened up their apps platform,”

all of the commerce platforms are experimenting. And the thing I would look for very careful is that I'm going to be early adopters in the app. Obviously, I'm going to connect there an Uber account with the Chad GPD account. I'm going to look to see these people who are connected. How's their behavior on my app? Are they going to my app or not? Are they opening up much less frequently? Because if that's the case, then obviously this experience is so compelling

that I would then have a choice to make. How do I make this experience? Maybe not as compelling as my app experience? And how do I incentivize them here to open up my app? There's a new battle happening for that first category, which is a new interface to be owned. We know Chad GPD T is, I'm curious if you think being the first mover matters to build a new ad network, because there's Gemini, there's Centropic, there's a bunch of people that have tons

of users using this new interface. How do you think about the landscape of the new potential

“entrance to build the next dominant ad network? What advice would you give these various parties?”

The good news is being first doesn't matter, because especially if you're in category one which we describe, you control your first party inventory. In fact, being second or third, you can learn from the iteration and mistakes of the first one makes. Your inventory is not going anywhere. Now some might have more urgency to monetize than others, but Gemini does need to monetize anytime soon. So they can just sit back, they have a lot of ads expertise and data from Google. They can sit

back and wait till they need to monetize. In fact, a good strategy for them might be to say, I'm the zero ad platform. Google can claim the Gemini has no ads in it. And there is certain set of customers or consumers who care about that. The biggest thing is, and open it has an a good job of articulating this, ad should not influence a content that is served to me or the recommendations

recommendations. And second, you have to keep a high bar for engagement and usefulness.

Unfortunately, however relevant ads are, the reality is that this is in proven,

is that once you start showing ads in an previously unmonitized zero ads surface, engagement or users goes down over time. Because some of the engagement gets ciphered off the ads, and some of it gets ciphered off in different ways, but this many holder groups across many companies are proven this. So the question for any one of these companies is, how much engagement are we willing to take in exchange for monetization? First, you need to have a holder group of people

who never ever see any ads, because that's your fresh group that never sees ads and you need to understand, that's their behavior. And then you need to always understand how people with ads are behaving. And then you need to figure out what the engagement hit is from each quantum of ads,

“and you need to then give your ads team a certain engagement budget. So that's what at Facebook,”

there was an engagement budget every year, that between the newsfeed team and the ads team, we had to adhere to. In other words, yes, we wanted this much revenue, but the check metric on the revenue was we can't take more than x percent dipping engagement over all for newsfeed. Okay, that well. He talked about like a North Star metric. What are the attributes of a good North Star metric? What advice would you give someone that's trying to pick the thing around which

the company is going to optimize? The North Star metric is a metric that is an indicator of company growth and customer value. So it actually balances customer value and business value nicely. North Star metrics in my opinion should not be revenue. It should be something that is directly call it a customer value. So for example, if customer doing well, the North Star metric should go up into the right, but it should also lead the business doing well. For example,

for square, the North Star metric was GPV, which is volume of payments processed. It was not going to revenue, it was somewhat going to revenue, but it was most importantly showed that the number of the amount of payment process to the company was continuing to grow. At Facebook, the North Star metric was DAUs. It was actually monthly active users, then it over time meant to daily active users because it was an indication of how engaged

users were. Now, one of the most important things about an NSM is that it needs to be coupled

with what we call check metrics. In other words, incentives drive behavior. So if you tell a team, going optimizes North Star metric, it's going to go up 100%, but then many things that you don't want to go down could go down. So for example, in the road ash case, because I want to grow GMV, which is a gross much nothing value, which is the North Star metric. GMV is the total order of total value of all the orders that go to the marketplace. Now, I could make it grow by setting

delivery fee to zero, by setting everything to zero, and what happens then? The company revenue goes to zero. So you basically want a check metric around the health of the customer, and the check metric around the health of the company. There are the guard rails around this North Star metric. So in the case of road ash, it might be I want to maintain a certain gross margin percentage, or I want to maintain a certain customer retention percentage. Margin is typically a

good one to use, because in some ways that is a indicator of the company health.

There's these two ideas that we talked about when we first met. One was the need for the very best

software companies to stand alone in the sense that someone can just go use it without talking to a human, and it just works for their problem, so like fully, fully self-serve. So I'd love to hear you talk about that. And a related idea was that's sort of on the builder side, on the investor side. You mentioned to me that all the great investments that you've had, the companies that have

“really had explosive growth have had a high number of one at four qualities, which is I think was”

gross margins low cost to acquire the customer high retention, and it tights sales cycle, which maybe maxed back onto the self-serve thing. Talk about the relationship between those two things. The sense of notion actually came from Google was the first company I worked with that chief massive scale. And what happened at Google was within the ad steam, we basically had my number of customers using the millions of customers using us. There were a lot of small businesses,

but there are also large companies. What we ended up doing to serve the large companies, large companies didn't want to use the product themselves. They had agencies using it for them on their behalf, and they also had internal people at Google support and sales and operations people using them. So on the product side, we built a lot of tools for our internal colleagues, for our sales and operations colleagues, to manage the system for a large customers. One day, I think we were at a

Larry review, and we were showing these what we called ICS internal customer systems to Larry.

“We were not main to show it, but I think to show him a demo, we somehow got into it. It was like,”

what is that? Well, it's a system used by our internal teams. It's like, why do you build it? We were like, well, we have to help our large customers. He said, you mean our small customers were going to access to it? We were like, no, and they're right now. I want to make sure that everything you're building for large customers is also available to small customers. So, we basically had to take everything we had built over years in this ICS system and make it available

to customers and turns out an interesting thing happened. Turns out the smaller customers adopted

that we didn't think they were news. Turns out the sales of customers were the most sophisticated users, because if you do something that's interesting, there's only small agencies, entrepreneurs, hustlers, if you can help them make more money, it's a testament to human creativity and ability.

They exploit the system in this that you never even know and you learn a lot from working with them.

So, I've seen in every case, when you open a system to self-serve, you learn so much more about the capabilities of the product than if you basically, it's your sales team doing it on their behalf.

“In fact, I'll never forget, in add sense, I think we had some of the largest publishers in the”

world sign up and start using us on a self-serve basis and then we engage with them after that. And I think companies like at least see an square, I think we had Nike signed up for a square, device and self-serve on board and start using one of these stores. It does two things. One, it makes your product better, because these folks, they use the product in ways that you don't expect to anticipate and it forces you, because what is the definition of self-serve? The definition

of self-serve is that the customer can, on board, not just use, but on board and use the product, without ever talking to or engaging with a single member of the employee base at the company. So when you do that, that means you have to think about, how do they actually get set up with the product? So it really puts a lot of effort on boarding, because onboarding is one of those things where most people drop off if you don't do a good job and then you've got to get them to moment

to delight way quickly. All of those things, if you're not building a self-serve, you're doing when think about it. In a self-serve product, you think about it every day. It's like a consumer

product or a self-serve business product. And then second, what it does for you is it opens up the

aperture to your customers. Because with say, 100 sales people, yeah, you can need to be 10,000 customers, but with the self-serve product, with the right word of mouth, you can reach millions of customers. Look at cursor, for example. It is used in every large company. I bet only maybe one person of companies is maybe the top-down motion, 99.9% companies, some engineering got it. Great example is a company called Figma, actually. After I invested in Figma, I joined square

one and a half years later. I tried to basically push Figma, thought down into the design team, because I didn't design. I said, you got you Figma. Designers, if you used to use it, they're using a tool called Sketch. And they said, you're not going to use it. Sketch is much better. And so I felt okay, it's not my place to tell them what to use. So I backed off. Two years later, a mid-level design manager came in and they brought in Figma from the private company,

“and they've got it to be used across and it kicked out Sketch. So I think with self-serve,”

you can get into these things, but even there's an incumbent, where you can infiltrate,

then be an insurgent in a unique and powerful way, which delicacies motion could never produce them.

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Visit RidgelineApps.com to see what they can unlock for your firm. What are the other dimensions that's changing fast is careers? I'm curious what you think about the sorts of people that will thrive best in this new era. So if you're a person hiring someone, what are the sorts of things that you would place extra emphasis on now in the AI era? The number one thing I think is going to be the focus on doing and building. I think CEOs

have gotten too comfortable over time and I think this is changing, hiring middle management very, very quickly, and hiring serial people. Instead, I think you're going to see the rise of AI agents doing a lot of work, but then humans who manage the AI agents and their eyes sees. So I think what the number one skill that is going to be relevant two years from now, probably one year from now, is to become a functional expert that knows how to build AI agents to do that function and orchestrate

an army of AI agents do that function well. There was a great article the other day I read about an PM at Meta who's non-technical, but to basically build a bunch of AI agents to do his job as a PM so well that even if the engineers like teach me how to use AI agents well. And so I think that's what you want. You want somebody who is essentially acting as a manager but not of humans but of AI agents. An management has to be a full-time job. What I mean by that is if you manage three, five,

ten people that saw enough, you either need to normalizing 50 humans or you need to be an I see. There is something called span of control which means how many people you manage and so span of control less than 10 should not be allowed in any company at this point. Because think about it, if you're managing even 15 people, maybe you meet with them once a week, that's 15 hours.

“What are you doing for the other 25 or 30, 40 hours? You should be working. So I think you've”

got to go back to doing. So I literally, and on the company side, don't hire managers as long

someone is that interfering them or learning about them? Best way is to give them a work project. Engineering does a great job. Engineering is always an a great job. Every company I've been at, they would have engineering coding interviews, programming interviews, etc. We have do stuff. Everywhere else, you can just be a COW without doing stuff. So it's where we establish work projects, where even for court dev, our work project was, give me one company that's square should buy,

and analyze the company and tell us why we should buy it and tell us what the city should be.

“So the best candidates are to do that. Every function needs to have a work project that you need to”

put them in a room without AI and get them to do the project. Get them to do the work. That is ideally very similar to the work they're going to do for product managers. We would take a product we were thinking about, and we would just say, "Yes, a product we're thinking about,

figure it out, should we build it?" The first and most important thing you want for this kind of

thing is especially for customer business, they need to take the voice of the customer. In other ways, they need to justify the why. The best PM candidates rejected the premise completely, and they didn't a beautiful way. They went and talked to 10 customers in the street. So brilliant, they said, "I talked to 10 customers, they were all square users and we found that none of them want this premium insights products. So we don't build it, we're going to build this other thing."

And said, "It was amazing. That's what you want to see. You want agency. You don't want people to just say, "Give me what to do and I'll do it." You want people to reject the premise of question the premise in the first place. Squash should not buy a company. That will be great. Why? Tell me why, and so that's a kind of thinking you're looking for." What was the one? Rodash had the best work project ever. He would give people either $10 at $20 and asked him to acquire a thousand customers. A thousand

customers were told as consumers. And literally some people would say, "I'm not going to take the challenge. I'm not ready for it or something." And great. If they are literally out of it. And then some

“people would take it. Nobody even came close to acquiring a thousand or even a hundred, I think.”

But the goal was to see how many different things they were able to try in the course of few hours. Someone went to the gym, printed flyers out, and gave it out. People would add all kinds of things. But it was a brilliant way to just filter out people who didn't want to do stuff. Is there any other advice that you would give the person building the career? We talked about evaluating and be a builder and all these sorts of things? How should one think about managing

a career in the AI era? Stay at every job long enough to have impact. Over the last 18, 24 months, I've been seeing this phenomenon of job hoppers or job optimizers are called them. We say a job for 12 to 18 months, and then they move to the next job. And then these are 12 to 18 months and move to the next job. That is one of the biggest red flags as an hiring manager that I see because I don't think you can achieve anything of value. You can't have any impact on

a company in 12 to 18 months. I think it takes minimum three to four years to have impact at a company. So my top advice is stay long enough to have an impact. Build a network. Have fun. From the moment you start a job, don't be thinking about what my next job is. Once in a while, maybe one job it didn't work out amongst the series of jobs. Okay, you left it 18 months. But if I'm seeing two or three jobs back to back, immediate red flags, you didn't do massive disservice. And you

wouldn't even know the problem is you'll get rejected. You wouldn't know what happened. It's that

people want people who stick around and build, who's going to hire you if they see that's your

“behavior. So I think it's already short, thinking you've got to build something of value and that”

comes with time. So much of the theme here has been identifying a superpower having one in the first place, evaluating one, matching it to a problem with the leader and so on with your investor had on and your new firm Marathon, how do you assess the capacity or existence of a superpower in a person? How you learned to do that? Well, the most important thing I look for is founder or tentacity. Three of the four countries I worked with, Google, Facebook and DoorDash also are in colleges.

And they all started as a way to just a toy problem almost that the founders are curious about and they started with an authentic curiosity. Can this be built? It got built and it started

and similarly with Jack and Jim, the software is solving a real problem. So my first question to

every founder is tell me your founding story. Why did you decide to start this company? The founding story, my opinion, expresses why they chose this problem and ideally touch on what the superpower is and what compelled them to work on this problem. I've had many people work with me or forming who have gone out to start companies with the only reason being, well, I have my buddy and we both want to start a company together. I really advise them not to do that because

just going on a selling company because you want to start a company with your friend is around reason. So I want to understand is there an authentic, lived experience that they've had in their life that compels them to work on this problem? Dylan from Figma, if we talk to him, he's sipped in design. He thinks about the design of things. He thinks about how to make things more compelling. It was very clear that he had a vision for what this thing would be. A good example is a

when Max, when he left square, he actually tried many different ideas and turns out, none of them were authentic to him and Fair turns out the idea that work was fair. When he was a undergrad student, he had an umbrella company that he created and this umbrella company, he was trying to get distribution for it in local retail. It was extremely hard for a brand.

“How do you get local retail? There's so many of them. How do you go in and fish to them?”

So, you realize that that problem is the one he wanted to focus on, other manufacturers who wanted to get access to local retail. Are there any other questions that you love to ask in

a first meeting learning about a company other than tell me your origin story? The other one is

idea maze. Tell me about how you navigated the idea maze. As you want to tackle this problem, because again, this is a classic product thing. You started the problem, but then there are many different solutions, many different ways to solve it. Why is this way versus the other way? You could have chosen, I will basically try to throw them off course or off kilter by asking them five six other ways to solve the same problem. Understand, if they are students of either history

or the industry, to say, by this problem could not be better tackled in this way. So, I want to understand that they have studied, alternative approaches historical approaches solve this one. I think good example is the call is since I think what a book on payments and they studied exactly why all the payments companies did what they did and how they failed and how they succeeded.

“And I think the best founders are students of history in that industry and they understand”

why all the prior companies took the mission and I did this time of the shoulders of giants

and they were able to build this company. But eventually I haven't talked about is the role that and not just the role, but the perspective that being on boards offers. You're a lot of interesting boards. The big ones are Coinbase, Pinterest, and Trade Desk. Me from those three, what lessons have you gleaned from? Being a member of those boards, watching how boards operate the role that they play, anything else that comes to mind from that unique experience.

One of the most interesting things with being on boards is that it gives you a much better perspective what it means to be an executive by being on a board. Once a company gets a certain size, I think the CEO needs to try to see if they can join a board because I think it helps them figure out how to deal with the board by being on the other side. The good board is composed of people who can help the company in the things where the company needs most help on an ongoing basis.

For example, every company needs somebody with maybe one or two people now increasing with product and engineering experience. In fact, every tech company cares 10 or 15 years ago, you would probably see zero product or tech people on boards. Now, every good board has one or two product or tech people. Second, you need a voice of the customer on the board. You need somebody who represents customers. So, at square, we got the CEO of Sheikh Shakur Andy Guruti on the board,

and he was amazing because he was a voice of the customer. The other thing I always recommend to

the CEO is a board role is like a marriage. Once you get into it, it's very hard to get out of. So, never, ever, ever invite anyone to join your board before spending at least a year with them. Have them join an advisory board. Have them meet with everybody on the management team. Spend time with them. Have them come to a few board meetings. Have them meet with the other board members. Have three or four people in your advisory board and then make one of them a board

number. If you like them, if you feel they're adding value, if your team feels they're adding value, etc. The other thing I've seen with boards over the last 15 years is the management team getting involved. 15 years ago, it would just be the CEO, the co-founder, maybe, and the board. We'll meet for four fires, discuss topics, maybe bring in the management team person for one slice, the CFO, and then they would leave. Now, most companies, they have the management team attend the

entire board meeting. I think that is awesome because I think management team and board get to meet each other as part of a board. You want to understand who's on the management team, who could be successor to the CEO, what are the capabilities of different part of the management team, and then as the management team, you want the management team to be able to leverage the board for help. I think one of the best practices I've seen done, I've not tried to push out the

company to do it is a notion of a board body. So, everyone on the board should become a body to manage and team member and they would then meet with that management team member, multiple times between board meetings. So, once a month or even text with them, and anything, they're almost like a sounding board, anything the management member has. You can see that the different board person I've described, they map nicely. So, I generally am the body for the head of product

of the head of engineering. Somebody else is a body to the CFO, someone has the body to the CRO. I think that meetings in between the board meetings are actually just as important as a board meeting themselves because there's a lot of things going on. That's the other thing I realize. It's not the board meeting that truly matters is all the things between the board meetings that are the real

“things that things get done. I think the only thing we haven't talked about in this grand art of”

company building and product creation is the job of acquiring the customer positioning the product marketing the way it presents itself to the outside world. What's the dispatch from the cutting edge

between enterprise focus and consumer focus, because your focus company is the big thing is how to scale influencers. They become much more powerful and how people especially younger people consume products and even choose products. Somebody said the TikTok is the best local search engine.

“And I think that's right. My kids have discovered very good traveling, crazy restaurants and”

TikTok that Google Maps would not really show or yet doesn't show it. So, how do you reach influencers or TikTok and there's a set of companies that's coming out that's essentially making

it easy. The problem is influencers and TikTok obviously there's head influencers, but there's a

long tail that go viral for different reasons and you want to capitalize on those viral waves possible. So, there is a set of companies that is building products to see if they can help brands connect with these influencers in scalable base. On the enterprise side, the most interesting thing I'm seeing is not really a acquisition channel as much as it is a onboarding channel. It is basically presenting an outcome to customer and saying let's collaborate on outcomes.

Palentier does that very well. Palentier goes to customers and say, "What's your most important business problem?" Oh, here it is. Okay. Great. Give us six months to solve it and engage with us. If we can't solve it, fire us. Don't pay us anything. If we solve it, pay us a lot of money. So, it's truly taking ownership and I think this goes to outcome based pricing, how your product is priced and your confidence in your ability to deliver that outcome. So, I think

outcome based selling is one of the most interesting ways of changing an in fact. One of the top piece of advice I have for founders reaching out to companies is, "You cannot lead with what your product does anymore. You've got to lead it. What is the outcome you can deliver? I

“really even have delivered." I'll never forget this example. What is crazy is that companies always”

look to other companies in the vertical. This never will change. So, for example, if you get JP Morgan

to use your product, I promise you every single bank will then evaluate your product. But if you get dropped in Gamble, JP Morgan doesn't care if dropped in Gamble, use your product. Even when you go to market, you've got to target instead of trying to be too horizontal and this is bottoms up. On a sales side, you've got to try to go after one or two very specific verticals because there is a very clear light host effect. You ought to go after the best one and get the best one

and then you basically win all the other ones in that vertical. I think you might have my traditional closing questions that I ask everybody. What is the kindest thing that an image ever done for you? There are so many a guy called Bob McDonald. I was a business school student on the East Coast. I was an visa, I wanted to get a job in Silicon Valley. I was somewhat unqualified. I had never been

a product manager before. I'd been an engineer and never worked in photonics, optical networking

before and Bob saw a spark in me and said, "You know what? I'm going to make a better new and I'm going to hire you and I'm going to bring you to Silicon Valley. He was a Sequoia for a company. One of the hottest companies in the valley. He could have had a pick of anyone, but he'd better me." So I basically have taken this approach that I try to pay it forward and I have no expectation and I do something or someone, "What created this spark in you?"

I've heard this spark come from. For me, it's all about just knowing how fortunate I am to be healthy, to have a family that loves me and to know that in almost every run of the simulation, I could be in a million different versus circumstances that I am today. And so just gratefulness and gratitude about where I'm sitting. I mean, we're sitting in literally the top 1% of the 1%

“percent situations right now. So literally, I think I feel pain when I see somebody suffering”

as they say, "Therefore the grace of God go high in some ways and but for the grace of God and you basically realize that you're very lucky to be given this one life and you have a responsibility to the world and yourself to be grateful and to meet the best life you can." Coco, this was incredible fun. Thank you so much, Ritan. Patrick, thank you, I felt it.

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