The idea of a PM makes no sense in the future.
The skill is more like being a CEO now, which is what are we building and why?
There's a lot of anxiety in the job market.
AI is going to radically reorient lots of people's careers and maybe including mine.
What I've noticed in some of the best organizations is the number one consumer of tokens is the CMO.
They don't need to rely upon deputies and deputies and deputies to get actual work product.
I want to hit on some contrarian takes that you have.
Your advice, you don't actually want to be talking to customers.
I hate talking to customers.
I refuse to allow colleagues of mine to talk to customers.
You have this idea of criticizing in public versus in private.
High performance machines don't have psychological safety.
They're about winning.
You're uniquely great at helping companies build world class teams.
If a founder shows the ability early in his or her career to assess talent ruthlessly and accurately, he or she can go very far with no other abilities whatsoever.
It feels like it's never been harder to attract the best talent.
Really talented people, when things are going well, they're not happy.
The morale actually does go down when people are skating.
The single role for the CEO is offsetting that complacency.
The better you're doing, the more the CEO should push.
Today, my guest is Keith Raboy.
Keith's resume, both as an operator and investor, is absurd.
He was an early investor in Stripe Palantir Airbnb YouTube DoorDash, Ramp and dozens of other companies.
He's part of the famous PayPal mafia, where he was executive vice president of business development and policy.
He's also been Chief Operating Officer at Square, VP of Corporate Development at LinkedIn.
He's also co-founded two companies, and he's currently Managing Director at Khosla Ventures.
It's safe to say that Keith is in the 999th percentile at identifying talent, building teams and operating world-class companies.
Before we get into it, don't forget to check out lenny'sproductpasscom for an incredible set of deals available exclusively to Lenny's Newsletter subscribers.
With that, I bring you Keith Raboy.
Keith, thank you so much for being here and welcome to the podcast.
It's a pleasure to be with you.
Okay.
So when we were starting this recording, you told me you're doing this from an iPad, which I've never had.
And you shared a crazy fact that you haven't used a computer in like years.
Talk about what's going on there.
Yeah, so when I started working at Square, Jack Dorsey was running the company off an iPad.
And so I immediately converted in September 2010.
And have a look back, I haven't touched a computer since September 2010.
Everything I do in my life is either done from my phone, my watch, or my iPad.
What's so interesting about this, as you were talking, is just there's this trend of engineers starting to code from their phone, like at Boris Chernyon and Simon Wilson, these two engineers that are like 10x engineers and they're just like coding from their phone, talking to AI.
And I feel like you've been preparing for this for a long time.
Yeah, trying to be ahead of the curve.
Jack's very good at being out of the curve.
If you just watch what Jack's doing and follow, pretty good shape and technology.
And just understand the benefit is it just avoid distractions.
Yeah, partially distractions, partially just the flexibility, like taking an iPad with you anywhere is just super easy.
You know, some laptops have improved since then, but like the screen flexibility angles, but like just the weight, like I carry my iPad with me everywhere.
So there's no reason...
There's nothing you can't perform, unless maybe if you're doing heavy-duty engineering, which obviously has not been my forte in life, although I may have to start.
There's no reason to use a more powerful, heavier weight, less flexible machine.
Wow. iPad maxing.
Keith Raboy.
See if you got my Apple.
As long as it's an Apple product, it works.
So appropriate.
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As I was preparing for this chat, there's just like so many directions we could have gone with this.
You are so smart on so many things.
I want to focus on something that I think you're uniquely great at, which is helping companies build world-class teams.
And I want to start in particular with attracting the best talent.
And what's really interesting these days, from what I can tell, is there's just like a lot of people that are struggling to find a job.
It's taking a lot longer to find a job.
It's just there's all these layoffs.
On the other hand, it feels like it's never been harder to attract the best talent.
There are so many amazing companies doing amazing things, so much money flying around, these hundred million dollar offers and things.
And so from the companies that you are closest to that you see are best at attracting the best talent.
What have they figured out?
What are they doing differently?
What are some creative things they do?
Well, let's start with first principles.
The most important lesson I learned when I was working at Square from my board was Vinod Khosla was on my board and he said the team you build is the company you build.
And that adage is the most important thing when you're creating a startup.
People get distracted with the market, with customers, with the product, with technology.
Ultimately, it's the team.
If you have the right people, everything else will be easy, and if you have the wrong people, everything else is going to be difficult.
So I actually learned this, Vinod distilled it, but I actually learned this back in my PayPal days.
So, you know, in the early 2000s, why was PayPal so successful?
Why were there such a you know, subsequent generations of successful, interesting companies for 25 years now is because Peter Thiel and Max Levchin marshalled an incredible density of talent.
So it allowed PayPal to succeed where possibly we wouldn't have.
And these people went on with interesting ideas, ambition and talent to build epic companies, you know, in all kinds of verticals.
So from day one although it's been day one of my technical career technology career I've always been focused on the importance of critical density, talent.
How do you identify, retain, and promote people without talent?
Back in the PayPal days, when I first started my career in technology.
I actually truthfully, was not very good at this.
Fortunately, Peter and Max were.
So Max basically hired all the technical talent in the organization.
Peter pretty much hired everybody else.
They used their network primarily.
So it was very difficult to get a job at PayPal unless you had a first-degree or second-degree connection to the engineering team or to Peter through Stanford, which is a different type of recruiting model.
It works really well if you have a strong network.
I wouldn't recommend it for everybody, but if you have a network that has unique people Talent, there's no substitute.
Interviews are not a great substitute regardless of how strong you are at interviewing.
But when I started back three years, I was mediocre at, let's say, hiring people.
Probably 50-50.
You know, some good people, some mediocre people.
That doesn't allow you to scale a team with an unfair advantage.
But what I learned to do is steal people from other people's organizations within PayPal very successfully.
So I got feedback from David Sachs, who was the CEO at the time, that I wasn't going to get promoted again until I could demonstrate leverage like leadership leverage, which he had an equation for of one plus one has to equal three or more.
So for every incremental person you hire, you have to show that you produce disproportionate returns, nonlinear returns.
And because I wasn't hiring that well, I wasn't really succeeding at that leverage.
So when I went around, took the feedback into account and said, okay, I really want to get promoted.
What do I do?
So I found people within the organization that I felt had talent, that were not being leveraged to the highest potential and ambition.
And I recruited them to my team.
And that was very successful.
And then I did get promoted actually fairly quickly because the people actually went up to speed.
They were able to run really fast and we produced a lot of really important results for the company.
The lesson though, that I took away was well.
That's great, because what it showed to me is I actually could identify talent.
I just couldn't identify strangers with talent.
So people that were in the building that I have lunch with or dinner with or go for a run around the PayPal campus with, I was accurate at diagnosing their abilities.
I just couldn't do it in a 20-minute, 30-minute, 45-minute interview.
So the first thing is just double down on people I know.
That doesn't scale perfectly, but learn to be excellent at if I had context assessing people's abilities, superpowers and weaknesses.
Then, over the next X years, tried to identify a different technique for identifying, assessing random people because ultimately, if you're gonna build an organization ultimately, if you're gonna be a VC, you can't just invest in people you already know.
So that took some years and requires some training.
Anyway, I think you can teach some of this to a founder.
But one advantage a founder has that's going to thrive is if a founder shows the ability early in his or her career to assess talent ruthlessly and accurately, he or she can go very far with no other abilities whatsoever.
Hiring is like a muscle.
You need to exercise it.
You need to try learn what worked, what didn't, what could you have known, what did you miss, why?
And riff on that and try to get better at it.
There are tactics you can learn.
I think the tactics work pretty well within the middle of a bell curve distribution of moving yourself 10, 20 degrees within that bell curve.
I don't think the tactics can really teach you how to identify.
Call it like top 10 basis points, top 50 basis points of talent.
There you have to deviate from the norm.
And I think that's actually true of most lessons in life.
If you're going to be extraordinary in any skill, you can't follow a playbook.
Otherwise, by definition, lots of other people would be the top 10 basis points, but you can get a lot better by learning techniques.
So for example, let's share a couple.
One thing I think you can learn to do is be excellent at references.
It doesn't work for hiring people right out of college or something, because the reference context is going to be a little off.
But I think, without getting better at interviewing and assessing, if you just learn to extract the right information from ruthless referencing.
So, for example, ruthless referencing to me means Tony at DoorDash does 20 references on every single senior hire.
20.
Wow.
I bet you he's pretty good.
Yeah, and then she's been pretty accurate too.
Uh, so i think you can learn that.
That's like a, a skill that's teachable, that being absolutely you know incredibly dedicated to your craft you can just get better at back in the day.
There's an investor at graylock who's on my board at linkedin, david z, very successful investor notable for both LinkedIn and Facebook investments.
He used to teach at Greylock.
You couldn't stop referencing a founder until you hit a negative reference.
So you would know you had exhausted the reference when you finally hit a negative reference.
And so I think there are tactics there in muscle building.
How do you get the right information from the right people?
How do you frame the questions, et cetera?
That will lead you in the right direction.
Now, you have to be careful.
Let's say, I'll give you an example where this can go wrong.
I've been a long-time investor from the seed round of a company called FAIR, founded by two of my colleagues at Square.
Max Reitz and Jeff Carlson worked for me at Square, and then the two other co-founders also worked at Square.
When people were reference checking Macs, often most VCs asked the wrong question, which was was Macs a good employee?
The answer to that is very mixed.
And so some venture capitalists, including some very good ones, were nervous about investing in Farrell.
If they frame the question slightly differently, which is is Max capable of being a world-class entrepreneur?
The answer was yes.
So again, it's like a tactic.
You have to understand like, what exactly am I trying to extract?
Same person, wrong question, wrong result.
And many people passed unfair and they regret it.
And these are actually quite talented investors.
They just didn't frame the question correctly when they were calling someone like Jack Dorsey out for the reference.
Any other questions you find really helpful in extracting the right information?
When I interview candidates for senior people in leadership positions, I always ask them you know, look at whatever company they're at and say if you were CEO, what would you have done differently?
And you get a feel for the strategic mindset of, you know, can they drive value creation?
Because almost by definition, they've come from a company that's had some traction success.
So can they edit?
So for your case, I would have asked you, you know, if you were CEO of Airbnb, what would you have done differently?
And you learn a lot from that question.
On references specifically, I think a general arc that's pretty good is asking the person what would lead to this person being most successful.
If something were not to work out, what would be the primary root cause that you can identify if something going wrong?
I think generally probing on those two arcs leads to a lot of insight.
And that first question is for the candidate, or is that in the record?
Yeah, for the candidate.
That's for the candidate specifically.
Got it.
Because I don't want them to criticize Airbnb.
I don't think that's that productive.
But you can tell how much of the current business model have they absorbed.
How much do they understand trade-offs?
And then can they create an unfair advantage?
Do they have insights into afterburners?
And then I have a follow-up question, which is usually gold, which is, let's say, I ask you this question about Airbnb and you give me this great answer.
I'm like, well, why weren't you able to persuade Brian to do it?
So you made this interesting point that there's like tactics that can help you get better at finding and identifying talent.
A lot of this is just the feedback loop of doing it a bunch.
It sounds like I find the feedback loop is so like it's hard to actually like, like most people interview higher and then don't really learn much from how it ends up going.
Like there's this gut thing that happens, but they're not like really thinking about it.
Do you have any advice for just how to make the most out of the lesson of seeing how something went?
So I've read some research on the topic.
And if you ask yourself, 30 days after any hire, would you make the same decision?
That 30 day loop is pretty useful.
And it basically, it's as accurate as measuring in a year or two years out.
So you've got a pretty tight feedback loop and you can ask the entire hiring team.
So I think that is just a technique that every company should use.
I want to talk about this framework that you have barrels and ammunition, because this is really mind expanding and helping people understand who to even hire.
So look, most companies raise money.
They have some traction.
They, you know, just see Brown, they get launched, get some traction.
Then they raise a lot of money, whether it's a series A or a series B.
And then they hire a lot of people infallibly, or at least historically.
And then the CEO, almost without exception, gets frustrated because they've hired a lot of people, their burn rate has increased a lot and they don't feel like more is getting accomplished per unit of time, per day, per week, per month, per quarter.
And they get frustrated.
And so then they sit around at a dinner with other CEOs or people like me or one-on-one conversation with me, and are incredibly unhappy and disappointed that I'm spending all this money on all these people but we're getting less done or the same done.
And why, why, why, why?
After years of sitting through these conversations at dinner with other CEOs or COOs, I realized that the fundamental driver of this is that the number of people that can independently drive an initiative from beginning, from inception to success, is very limited within any company.
And if you hire more people without expanding the number of what I call barrels that can drive from inception to success.
All you're doing is stacking people behind the same initiatives.
And so you're wasting time, energy, and increasing your collaboration tax, your coordination tax.
And so that's what causes the drag coefficient.
So for example, at PayPal, we had about 254 people in Mountain View when we were acquired.
Of those people, depending on how strict you really want to be, it is considered one of the best talent rich networks of all time in technology.
There is between 12 to 17 barrels in the organization.
That's like an infinite number.
I once asked Jack Altman on a podcast at Lattice, which is a pretty damn good company, how many barrels of company?
The answer was two.
That's a more common answer for a very good company.
So you have between two and let's say 15 barrels that accompany.
That defines the unique number of things you can do in parallel versus sequentially.
And just hiring more people is not going to change that.
And if anything, it's just going to cause a collaboration or coordination tax and you're going to have a track record and you're going to do less.
So the key is to me is if you want to do more or need to do more.
Your market requires you to do more.
Your business model requires you to do more.
VCs require you to do more.
You need to have more barrels.
Now the question is how and when, and there's a lot of details there, but fundamentally the ratio of barrels to ammunition is what dictates the number of important initiatives that can be pursued simultaneously.
And you're not saying you don't want ammunition.
It's valuable.
To make an impact, you need ammunition in addition to the barrel.
Yeah, you definitely need ammunition.
And it depends on what kind of project.
There are types of projects where an individual barrel may be able to succeed with very limited or no ammunition.
Sometimes it may be a designer, an engineering team, a PM, a data analysis, blah, blah, blah.
Depends on what the project is, what the problem you're trying to solve is what's the proper amount of ammunition?
But once you think about the ratios of ammunition to the problem, you can be much more constructive and deliberate and intentional about the team construction.
Most people hearing this assume they are barrels.
What helps you understand if someone's truly a barrel?
Can they take an idea and make it happen?
Basically, we're going up that there's a hill over there.
That's the hill.
Get us over that hill.
And, one way or the other, they will motivate people if they need to.
They will accumulate resources if they need to.
They will measure what they need to, and they're going to get your company across that hill.
That's a barrel.
Anything less than that is not a barrel.
And so this is skills like internal org stuff, resource, like strategy, like whatever.
Yeah, it's kind of the collection of all the things to get something done.
Collection of all those things.
And so basically there's an outcome.
CEO wants CEO, founder wants an outcome and, come hell or high water, this person is going to deliver that outcome.
Then the outcome can be, you know, fairly narrow and not that difficult in the beginning, and then you expand the scope.
You know the complexity, the difficulty that you basically entrust to your barrels.
And sometimes they have no line of sight of how to solve it when you start.
Sometimes you have a preliminary idea.
So it ranges, but ultimately it's that skill of, I'm going to take this off your plate.
You can fire and forget, and this is going to happen.
And if it's not going to happen, I'm going to come back to you proactively with the issues I'm confronting, what I've already tried, the diagnosis of the root causes and ask for your help with sufficient time for you to intervene and try to brainstorm with me to get us to the right answer.
Agency is the word that comes to mind when you talk about this role.
Yeah, I think agency is accurate.
The problem I have with terms like agency is it's a little bit like strategy, because in one ear a lot of people and out the other and they don't really process the meaning.
Yeah.
What are some examples of barrels that make this real so people can understand what you're talking about?
I talked to my YC lecture in 2014 about how to operate.
They can be as simple as the now somewhat famous in technology smoothie test, which is we used to have engineers work pretty hard at Square and pretty late.
And I always wanted them to have like food, so they wouldn't be famished, they wouldn't be distracted.
And I didn't really want them to eat like junk food, because I actually think junk food is bad for you, bad for your brain, et cetera.
So settled on delivery and really wanted to provide like at 9 p.m. like cold smoothies.
And we had, at that time, a pretty substantial team at Square, office team, EAs.
This was not a lean, mean organization.
And so I tried through the office team EAs, and we never got healthy, delicious and cold smoothies delivered at 9 pm.
Just kept failing.
It's getting frustrating because if the smoothies aren't cold, then no one's going to eat them.
They don't arrive at nine and no one can really bake on, you know, the refreshments.
Everything went wrong.
And then I had this intern named Taylor Francis.
And I was explaining just my frustration.
It was like his second day at work.
And he's like, I'll solve it.
And I was like, okay, kid.
Good luck with that.
I was like, sure.
Keep trying.
Anyway, day goes by.
9 o'clock arrives.
And lo and behold, smoothies show up at 9 PM, delivered on the standing desk table where the engineers would congregate.
I sample them.
They're cold.
They taste great.
And I'm like, oh my God, I found a barrel.
And I later gave him almost everything to do.
I want to go back to actually the first question we did.
You shared some amazing advice for how to identify great talent.
But I'm still curious when you find that barrel, for example when, like everyone's throwing money at them, there's all these amazing teams to join.
What are some things that companies do to attract and convince them to join their team?
The standard stuff is still true.
Mission, selling the vision of mission is indispensable.
Most people who have proven talent anyway, at least in the current world, are going to attract offers from multiple opportunities.
And so you've got to convince them that your opportunity is very special.
I think one way to do that that's a little bit more nuanced is convince them that their particular skill overlaps with the critical blockers to the current company, meaning they're betting on themselves.
So, for example, if they are superb at, let's say marketing, If the biggest blocker in the company's current success is not technology, not the product, but we believe it's marketing, it's really easy to go to a world-class marketing person and say not only is this great company building something really cool and interesting that you'll be proud of, but your particular ability is very unique and differentiated and you can solve this.
This is actually how I wound up at Square.
Back in 2010, I was actually I'd just been acquihired into Google and was planning on being a VC.
Actually, next after I was kind of like vesting whenever Google is going to compensate us.
And then the investors in Square called me up and they said hey, we've been looking for almost a year now for someone who knows something about financial services yet is still entrepreneurial.
And they were like, hey, there's only three of these at the time.
So I was like, there's only really two or three of you in the world.
So would you be interested?
And I said, well, maybe.
But that was the argument to me that made me leave Google early, like after two weeks, and infuriate everybody.
And bypass, you know, venture for another three years, which had been my plan, was because they made the argument that Hey, I was one of the three people in the world that could actually do this job.
So there's like a, I don't know if it's ego, but it's also just like impact.
Yep.
Well, exactly.
In fact, like you have, you have talent, you want to use them and you want to feel that you're challenged every day and that what you're doing really, really matters.
So I think that can be extremely helpful.
My more important arc in this is I think you have to build a company on undiscovered talent.
I don't think you really want to compete for the people that everybody else wants.
Right.
And, you know, I learned this at PayPal.
Peter taught me this literally the first day, the first week of my job at PayPal that the way to build a company we were jogging around the Stanford campus is you've got to find these undiscovered talent.
That's the only way to scale organization against these large economists with infinite money, et cetera.
And, you know, I've been on that crusade for 25 years.
For those who are interested, you can link to it.
I gave a speech at ramp, you know, how to hire the talks in detail.
I also recommend Eric CEO of ramp speech, which is fairly similar.
Both videos are online.
I, that's such interesting advice and it makes so much sense.
You're not going to be able to afford the people that have done the thing at top companies.
And also they're just probably not the people to join early.
Well, they're also not maybe the people you want.
So there's adverse selection, but you know, it's like a salary cap.
Most sports these days have salary caps.
And when you're a startup, not only do you have a salary cap, you probably have one-tenth the salary cap of the people you're competing with.
So you've got to figure out how to leverage less assets to more success.
What's just one tip when you're looking for undiscovered talent, that's a sign of okay, this person is really special.
I know you have a lot to talk about here, but just what's one tip?
I think it's basically isolating why... other people aren't going to process them correctly.
Most recruiting at large organizations becomes sort of a homogenous function.
And so if you understand why this person is going to get thrown into this block box kind of thing and not get processed accurately, it's pretty easy.
So I always think about you.
Know, let's say, this person was interviewing at Meta, or Google or Block these days, or Coinbase.
What are they going to miss?
And then why, and then that leads to, oh, perfect.
So sometimes it's just lack of information.
Like one of the reasons why you know sometimes it's controversial to say this, but one of the reasons why the net impact of my hire undiscovered talent is you wind up skewing younger.
It's not because you need young people.
It's that younger people have by definition less data.
It's like, you know, we use credit scoring, FICA scores.
It's the same thing for employment.
By the time you're over 30 some odd things.
There's so many data points about you that this black box machine is usually going to process you like many other people.
If there's no data points, it's very hard for a black box machine that does homogenous evaluation to evaluate you.
So there is alpha, so to speak, by definition for people who have like no data point.
It's interesting how this is the same skill as being an investor, picking startups to invest in.
Yeah, absolutely.
Okay, I want to talk about something else.
I asked a few people that know you well, that work with you at various companies, what to talk to you about.
And one person said that when I asked him what to talk about, he said my immediate reaction is that he is a bar raiser.
No matter what kind of numbers we put up, he pushes us to do more.
In fact, often it seems like the better we do, the harder he pushes.
Does that resonate?
Yeah, I think that's true.
I mean, I think, look, ultimately, I'll channel someone else's feedback, but it's the same thing.
So a friend of mine who's a CEO once asked Mike Moore.
It's like what's the most common denominator of the best CEOs ever?
And he said, it's the relentless application of force, quote.
I think that's the job of the CEO.
People eventually get comfortable, complacent.
The more success you have, the more complacent the organization tends to get.
And the single role for the CEO is offsetting that complacency.
So for the point, the more success you have, the better you're doing, the more complacency naturally kicks in.
And unless you've erected a network effect, you do not want to get complacent.
And even then, you can debate whether you should.
But fundamentally, most businesses are not network effect businesses.
They are not going to run on their own for a long time.
So I think that's one insight is the better you're doing, the more the CEO should push.
Secondly, it's a little bit like sports when you're growing up.
People... when they're winning, take advantage of feedback better than when they're losing, usually.
So, for example, now what I do is mostly VC, mostly a board member, mostly I could consider the RHF founder.
And when the company's struggling, maybe what's less intuitive and you may have picked up on this in your research and interviews with people who know me When a company's struggling, I'm actually usually very non-critical and more like a coach and supporter, because the company, the founder, knows they're struggling.
Being critical doesn't really help them solve their problems.
That's when being supportive can actually somewhat counterintuitively more important.
But when the company's thriving, it's really important to be critical and isolating things that will eventually be problems while everybody in the company is really happy and borderline complacent.
So you kind of want to be the opposite as a default.
And that's like a really good sports coach.
When you're winning is when to polish everything and really master the details.
When you're losing, you definitely also have to be exciting people and embracing the future and selling the future.
So is the advice?
Say, someone's listening, a founder or a product leader?
The advice here is just keep pushing harder.
Set the bar higher as things, even if you're doing great.
Yeah, if you're doing great.
Well, also, you have to remember, like, I remember giving a speech once at Square.
It was like you get to a certain threshold.
It creates an inflection momentum, gets you a certain valuation and all these attributes.
But it's kind of like winning a Super Bowl.
You get... The last year was great.
Last four quarters were wonderful.
It's like winning the Super Bowl.
You got to come back next year and start your record zero, zero again.
And you got to remember that.
Actually, adventure is like that.
You know, I'm only as good as my last investment.
I've had like 13 years or whatever of pretty damn good investments, but like...
Truthfully, I have to wake up every day and find some undiscovered founder that's going to change the world.
And if I don't do that, it doesn't matter what I've done the last 13 years.
And a company is kind of like that.
The company can skate on autopilot for a while.
Venture, you really can't ever skate.
I definitely saw this with Brian Chesky.
It just felt like things were going great.
And we just shipped amazing products and growth is up.
And he's just always like pedal to the metal no matter what.
Just like, come on, when are we going to take a little break?
And it's interesting because when we did have the little breaks here and there, Morales actually went down because people are like what am I working on?
I don't know.
It's not that exciting.
Brian and I are usually in sync a lot.
There's a really good interview where I interviewed him also at the same conference.
I've had a higher when he talks mostly about founder mode, but I generally subscribe to virtually all of Brian's views.
He even taught me some of these things himself.
But the more important point I think you identified, which is very subtle, is really talented people are like superb athletes.
And when things are going well and people are really kind of coasting, they're not happy.
They have an internal clock tempo.
They just want to create things and create value and drive, drive.
And the morale actually does go down for the best people in the world when people are skating.
Okay, so actually along those lines, there's a lot of anxiety in the market, in the job market, about
The future of careers.
Am I going to have a job?
Am I going to like where things go in?
And it just feels like people are working very, very hard.
There's just putting a lot of hours, especially the most AI pelt people.
It just feels like they're working harder than ever.
I don't know if you saw this thing Tyler Cohen put out of just like work harder.
Now is the time to work harder because AI is eating away at your value.
You know you probably talked to a lot of people looking for career advice of just like.
This feels scary and I feel like I'm working too hard.
What should I do?
I don't know.
Do you have any just like advice for folks?
Well, I do think AI is going to radically reorient you know, lots of people's careers, maybe including mine.
So I think that's actually true.
And I think the way to thrive in a rapidly emerging technology world is to be intellectually curious.
So, for example, you know I'm a business person historically, you know I did, actually could when I was really young, but like basically professionally just a business person.
What I've noticed in some of the best organizations is the number one consumer of tokens is the CMO.
Because these people are intellectually curious.
And so they're like, wow, there's all these cool things I can do now with my hands.
Either I had to rely on other teams or never got access the way I wanted, and blah blah, blah or lag.
And they just do it.
This is actually true at Opendoor.
It's true in another great company that I'm on the board of that's incredible.
And so I think you can be intellectually curious and future proof yourself more than just yes, you can work harder and a big subscriber to like no days off and working all the time and all that stuff.
But fundamentally, the intellectual curiosity is able to learn new things.
And that is how you embrace the future.
So, and you said CMO is who's- CMO.
Both of these two companies.
So interesting.
Both massive, you know, awesome companies with lots of engineers.
And I think that's very encouraging, you know, for the executive particularly.
I'm like, this is definitely like the best executive in the company.
And what are they building?
Is it like landing pages and pay tests?
Sometimes it's like more like what we would have thought of analytics.
Sometimes it's actually campaigns, like actual campaigns.
It's just like they don't need to rely upon deputies and deputies and deputies to get actual work product.
And so they're just like shipping things and like, or shipping drafts of things or giving the CEO insights into things themselves.
I want to get your take on the future of specifically the product triad.
You work with a lot of product people, engineers, designers.
Everyone's always wondering what the hell is going to happen in my career.
Thoughts on just the future of those three specific roles?
Well, I saw this podcast, or listened to this podcast that Peter Fenton did, and he convinced me that the idea of a PM makes no sense.
Basically, in the future.
If you think about decomposing the logic is what does a PM usually do?
They take these inputs from customers.
They create this sequential roadmap that's well organized over the next year, blah, blah, blah, blah, blah.
That world is ridiculous.
Right now, the capabilities of foundation models or companies like Lovable and things like that are just so improving at such a rapid rate that it makes no sense to have a year-long roadmap.
And they're just like incoherent.
There are things that were impossible to do in November that are actually pretty easy to do right now, in March.
And so I think you need to build an organization that's incredibly adept at you know, people say nimble and all that stuff but incredibly adept at changing the roadmap almost on the fly.
And I think intermediaries like conventional PMs don't make a lot of sense versus being prepared intellectually, embracing and exploiting noticing,
So someone needs to notice that oh wow, we can actually do this, but then exploiting it.
This week is the future of a very high growth stellar startup.
We'll notice that something is now possible this week and create new features and new value for customers next week.
That's such an interesting area of discussion.
A lot of people listening to this RPM.
So I want to try to defend that role just to see if you see if I can convince you otherwise.
And, by the way I will say Mark Andreessen had this really good visual of just what's happening.
Here is like every, all those three functions.
It's like the standoff where they're all like, I'm going to take the future is my role.
The future is design.
That's engineering is the future.
So the way I see it is, as AI makes it easier to build and kind of eats the middle of the software development process, just anyone can build you.
Tell the AI, here's what I want.
The hard part.
The gap, at least for now, is figuring out what to build and then aligning everyone around what to build.
I agree with that.
I actually think like, whether you talk about someone who used to be a PM or someone who used to be a designer or called an engineer, the skill is more like being a CEO now, which is, what are we building and why?
Exactly.
And to be a successful engineer is That trait's critical to be a successful designer, because the tools and the ability to actually create the thing, an object, is going to be easier and easier, But the art is knowing what to build.
Another competitor of mine, Alfred Lin at Sequoia, likes to talk about being a chef.
When you're a chef at a prime restaurant, you're not actually cooking the dish.
You're sampling your colleagues and editing their work a little bit.
But fundamentally, it's half a commercial role.
Being a chef in a famous restaurant is what's our value proposition?
How do we differentiate ourselves?
How do we brand ourselves?
What's our segment?
What's our pricing, et cetera?
What's our location even?
That's what makes a famous chef.
They're literally cooking the dish. all the time.
Okay.
I 100% agree.
Interestingly enough, PMs are called mini CEOs often.
And I think the important thing is, it's not like, what do you call this person?
I think the question is what skill will be most like.
Where are human brains still going to be necessary?
Business acumen.
It's basically business acumen.
Right.
Like what will help this company grow and succeed?
Exactly.
I understand the company's business equation, where we're trying to go and what the inputs and connection outputs are.
And I can, on my own, create things that move the needle or potentially move the needle.
It's very exciting because you know you can actually drive impact like much more easily now as an individual.
My conclusion based on what you just shared is of the three roles, which role is best at that?
And historically, it'd be PMs.
Obviously, I think the important thing here is it's like the best you know, it's like great PMs or great engineers.
Designers will do well.
But I think interestingly, what you're describing to me is what it sounds like, what a great PM would be really good at.
Basically,
If they were exceptional, I think that's right.
But I think a lot of the best engineers I've worked with have commercial instincts.
Like Max Levitan has his own steroids.
Jeremy Stoppelman, he's...
Worked with me very closely at PayPal before he started Yelp and got promoted to be engineering director and vice president of PayPal.
Had commercial instincts, you know, back when he was an individual contributor.
So I think there are great engineers who are technically proficient, that have always understood the business building.
Yeah, I think that's like the ultimate unicorn is an engineer that is also very business minded.
It's going to put a premium.
I think at the age of AI, we'll put an incredible premium on that, because they're not going to need a large team.
You're not going to be marshalling the forces.
Like, you know, another example is a good friend of mine is director of engineering at Ramf.
He ships as much code personally.
So he has a team of about 20 people.
He personally ships as much code as he used to as an individual contributor, while he's managing a team of 20.
Because the tools are so great and he's become a leading pioneer in the usage of AI.
And he's basically using AI as a second team.
He's basically like, okay, you're the team manager.
You do this, you do this, you do this, stitch this together, check this out, blah, blah, blah.
And I think that is definitely in the future.
I 100% agree.
Engineers that are very good at that are just extra valuable.
What's your take on design and the future of design, the value of design?
Well, you know, it's interesting.
Design and code are merging.
And it's not clear to me who triumphs of like.
Is it code becomes design or design?
Just translate automatically into code.
I've made some advancements that bad on both in some ways.
But I think they're merging in a way where they're not separate fiefdoms anymore.
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What I'm seeing is something really interesting happening with design.
On the one hand, I just did some analysis on the job market for design and it's basically plateaued in terms of the number of open design roles over the past three years.
It just hasn't gone anywhere.
It's flat.
We had the head of cloud design, Jenny Nguyen, on the podcast and she had this kind of insight that the design process there's no time for the design the traditional design process.
There's like, engineers are shipping 17 things a day.
There's no time to sit there and help mock and prototype and all these things.
Well, let me give you a couple of concrete examples.
So at Shopify, they've been doing this for over two years now.
So this may seem normal, but they have not let PMs provide PowerPoint or keynote presentations on product for two years.
Every presentation on product has to be a workable demo.
And they just expect the PMs to create the products.
And the execs just refuse to look at static, you know, we're going to have this feature.
No, I want everything working.
This is for two years.
So I think that, you know, again, like everything's just merging together.
That's so interesting.
You would think though, because there are so many products launching every single day, like there's just endless things to pay attention to.
You would think design would be a differentiator more and more.
I do agree with that.
I do agree with that, actually.
I think the alpha is in design, just like in marketing.
It's not the tools, it's not the channels, not the metrics.
It's a storytelling.
It's how do you cut through the clutter in the snappiest, most compelling possible way?
There's kind of an NP problem.
There's so many different words you can use to express the same concept.
But the person who can say this is the way to frame it, you know, the proverbial thousand songs in your market is worth like all the tools in the world.
Yeah, so that's the other part of my insight recently is, just as AI makes it easier to build, it's kind of expanding from the middle out.
And what remains is figuring out what to build and making it iterating on the idea.
And then it's at the other end of the spectrum, which is distribution, getting anyone to pay any attention to what the heck you've done.
Cause again, there's so much happening every single day.
Yeah.
Cutting through the clutter.
I mean, that's always been critical.
I mean one of the times when people are pitching me as an investor.
It's one of the things I'm dialing into, you know immediately is how the hell is this going to cut through the clutter?
It's one of the reasons why I don't like to take like customer feedback into account because, by definition, when you put something in front of a customer, that's not a proxy for the real world.
In the real world, you have to cut through the clutter while they're going to their Barry's bootcamp, while they're doing their job, while they're raising their kids, you know, et cetera, et cetera, a lot of their walking while they're on the subway, like that.
Like you know, an isolated fake experiment doesn't give you actionable insights and often is directionally wrong.
Interestingly, on that line uh, there's a few companies that are launching simile as one that is simulating humans.
I don't know if you heard about this company.
They basically are building ai models of actual people so that you can simulate your marketing launch and your product experience with people before you launch.
I don't know that I've seen that specific company.
I have seen one or two sort of pitches.
My general question as a refrain on those type of companies is what are they training on?
Because again, if they're not training on the right data...
It's dangerous to say you're simulating humans.
Yeah, yeah, that is the question.
Oh, man, what a weird world.
Along these lines.
Actually, you have this I don't know if you call it a hot take that AI content is going to surpass human content, and that's just the future.
Oh, that's inevitable.
I was talking to someone and she was saying in the Chinese TikTok conversation uh app, it's just like all ai videos now and it's like very good, she like actually enjoys watching these videos and these stories.
I think it'll be like a binary sort.
Maybe I could see products and content thriving that is clearly still human generated and that there's some desire for authenticity.
Just like, for example, you know, this piece of art is a Warhol.
Anybody could create this now.
High fidelity.
But there's still an appreciation for this was created by Andy Warhol.
I think there's going to be a curated experience with a premium of provenance that you know is human, created.
And then there's just going to be a sort of a rank filtering of what's the best content.
And whether it's AI generated or not, it's a little bit like the Ben Thompson's trajectory thing of curation, you know, versus algorithm.
There's going to be two poles and the curation may be for human created stuff.
And then there's going to be the algorithm, which is just what's the best.
I 100% believe that.
That makes so much sense.
I was just thinking the other day, it's so interesting that AI is getting very good at video.
Videos are actually fun to watch that are AI generated.
And then images are getting really good.
But writing is still really bad that is AI generated.
And it's ironic that it's called a large language model.
It's all context text text, trained and it's just like that's the thing it's least good at, which is really weird.
Well, i think part of it.
That's the economic decision of token rationing by um, the lms, like they they basically are.
When you prompt, they're kind of trying to make their economics work within the bell curve distribution.
And so, for example, if you prompt an LLM to write something that's very short, the quality is significantly better than if it's a page paragraph.
I mean page to chapter to book.
I think it's token ratioing versus actual quality.
You would think, though you know, like I don't know, if it was Hemingway of, just like if I had more time, I would have made it shorter.
Like it takes more work.
I think the writing, right now what works best, is short, many short examples, and then picking editing, reprompting.
Yeah.
It's a little bit like when I used to be a litigator 25 years ago.
The hardest part of writing a brief, or all the art and all the magic, was the first paragraph.
If I could write that first paragraph really well, the chance I would win the case and convince the judge would go through the roof.
So what I would actually do is I might have three weeks to write a brief.
I might spend the first week or more walking around the office thinking through how am I going to nail the first three sentences.
Once I figured out how I wanted to frame those first three sentences, I could write 30 pages in like two days.
But getting that right could take a week or two.
Sometimes it would occur to me in the shower or literally the shower or in the middle of a run.
It's like, oh my God, here's how I distill it.
Then I could just sit down and power through the rest of the brief.
And I think it's a little bit like that.
The power through the rest of the brief works well.
You still need the first three sentences.
Is there a story from that time in your life that would be interesting to share?
I didn't even know about that.
So yeah, not everybody knows.
You know I spent the first four and a half years of my professional career as a law clerk and then litigator, which occasionally comes in handy.
Truthfully, like sometimes, trading off business risk against legal risk is a valuable thing to do.
Sometimes it's not accidental that many of my best investments or in financial services in heavily regulated areas, because I think I can sort of do the legal risk assessment in my own brain.
This was definitely true back in the day when I invested in YouTube.
But I think most things that lawyers learn are very... inconsistent with being entrepreneur.
So when you're graded as a lawyer, you learn every exam in law school virtually is issue spotting.
So you get credit for identifying.
There's like a fact pattern.
Identify all the issues and then resolve them.
So you learn to identify everything that can go wrong.
Moderately useful, but very not useful as an entrepreneur.
I mean, sure, you can identify all the reasons a company could fail.
Not that difficult to do.
The art is solving those.
So not the best training.
And then you also measure your productivity by hours worked.
Literally, you build per hour.
It took me two years to...
Maybe a year and a half after converting to technology to stop tracking all my time.
I used to literally write down in my notebook a half hour of this meeting, 20 minutes on this, you know?
Blah blah, blah.
It's getting out of my brain.
That is so funny.
And David Sachs was a lawyer, too.
It's like interesting.
That's true.
Peter Peter is a lawyer.
Peter was smart enough to quit after five months and four days.
I think David never practiced or maybe even smarter than both of us.
Okay, I'm going to hit on some hot takes, contrarian takes that you have.
You have a number of these.
I heard you share on a podcast recently.
They asked you, why don't you have as many contrarian takes these days?
And you're like, well, they've just all been proven right.
And that's the problem is, you know, if you have good ideas, eventually you want them to be adopted.
It's a little bit like, you know, when you're an investor, you want to be contrarian.
So Airbnb is?
You start with a contrarian take, but eventually, if the company's going to succeed, it has to become consensus.
Like everybody in the world has to use it and believe in it and trust it.
So you want that inflection.
Like you don't want to just have contrarian takes and then nobody believe it.
So you do need a refresh rate.
And then the question is, how do you find new ideas?
But you want to actually exhaust them.
Okay, so one that I think people still would disagree with is that your advice is for...
Unless you're building an enterprise company, you don't actually want to be talking to customers.
Yeah, I hate talking to customers.
I refuse to allow colleagues of mine to talk to customers.
You know there's the famous.
You know you can talk about the famous stuff and the Steve Jobs.
You know the horses and the old, faster horses and all this stuff.
But I think it's more important is it's often directly wrong.
Customers don't know what they want, and they're very bad because it's a subconscious decision, especially for consumers.
Like what I purchase, what I wear is not a conscious decision.
And when you're consciously trying to answer a subconscious decision, you actually give misleading information, even when you're trying.
The proverbial example I like to use, but it's instructive, is ask anybody who drives a super fancy car like a Porsche or a Lamborghini, why they bought the car.
99% of the time, they will tell you every reason except the real reason.
Once you realize that, you're like, I'm never asking customers anything.
Now, if it's hardcore enterprise, customer development does work because there is a decision maker.
And the decision maker is mostly making utilitarian decisions.
And yes, there's political forces within the organization and you may or may not be able to tap into those.
But fundamentally extracting that information is valuable.
But a consumer SB, micro merchant product unmitigated disaster.
And so the implication here is you need to rely on your instincts and gut and experience.
Yeah, I mean, humans are humans.
I have this other line I like, which is everything important you need to learn about humans.
Was written by Shakespeare.
Just read Shakespeare.
That's better than all the customer research.
Now you are producing a movie and ultimately, this movie doesn't just need to be critically acclaimed.
You have to sell tickets.
So you're not selling tickets.
You have to question, OK, is the trailer wrong?
Is our distribution.
You know where we're trying to meet people to let them know about the movie.
Is that wrong?
Fortunately, unlike a movie, you can go back and say, have I casted this somewhat incorrectly?
Is the script slightly off, et cetera?
But the goal of selling tickets And that's what you want to optimize for.
But if you don't sell tickets successfully economically efficiently, you definitely want to go back in a loop and try to reorient things so that you are selling tickets.
So it's like CAC LTV kind of stuff is what I'm hearing here.
And so your insight here is just like, it's not only like, it's like, it's not going to help you.
You're saying more so it's actually harmful.
It's harmful.
And then people will say yeah, like I've signed so many meetings and this would infuriate me, but where people would be like I talked to eight customers.
Blah blah blah, blah.
And I know that this isn't statistically representative, but then they pontificate for an hour.
And then they're like, oh, I know this is not blah, blah, blah.
But once you hear this stuff, it's like, you can't take this out of your brain.
And then every other subsequent meeting is like this stuff that's just locked in the customer's brain.
So yes, in the enterprise when you have like.
I work with a company in AI that has 30 must-win accounts.
That's like the goal for the company over the next two years make sure all 30 and we're doing really well get all 30 using our product.
Great.
We actually can talk to all 30 customers and we can actually meet the decision maker all 30 customers.
And we can influence the CEO, right?
All 30 customers.
That is a useful exercise.
If you're targeting a billion people on the planet, you are not getting representative feedback.
Being a contrarian take, many people would not believe this is good advice.
Do you have a story, maybe an example of just like?
Wow, like someone talking to a customer saying we're going in the wrong direction for a while.
Oh, all the time.
They're called failed companies.
You know, there's a reason why.
I mean, there's a Darwinistic efficiency to this too, which is just like Hey, there are things you can do that.
Like, is it feasible to do X, Y, or Z?
So for like, let's get like DoorDash.
I don't think customers told us that we want a button on our phone to click to deliver food.
But you could talk to restaurants and say hey, would you put this placard here so that people walking into a store know in the future that they can get delivered?
Okay, yeah, maybe.
Then could you run an experiment of how many deliveries per hour would you have to do to break even?
And is there enough density?
There are ways to improve the odds that you can make the business work.
But I don't think launching the company saying, hey, we found 10 people in Palo Alto.
Do you want this button on your phone?
So when Tony and Evan walked into my office originally, The epiphany I had was well, they had a stat which is 93 of the restaurants in the United States don't deliver.
I was like, okay, seems like it should be a higher percentage than seven.
And then, when they were describing what they wanted to create, Andrew Mason of Groupon fame had famously said these phones, these devices, should have two buttons.
I'm bored and I'm hungry.
And I was like, oh my God, you're the I'm hungry button.
And then it sort of just clicked in my brain.
And then it was like okay, now we need to make it economically possible to scalably do this.
Good luck, guys.
And this advice is not just consumer.
You're also talking like DoorDash has like SMB-ish.
Yeah, like Square and things like that.
Square, yeah.
Square is a good example.
Like anything sub mid-market, I think it's directionally dangerous.
And the advice here is basically trust your insights.
Like you need to have the insight yourself.
He can't find it.
I think typically the best companies, there's foundational insight.
And, you know, people don't necessarily want to hear that, but like, There's logic.
You can acid test and pressure test the logic.
To some extent.
When Brian first pitched me on Airbnb, there was some interesting evidence he already had that this was going to be successful.
The number one that once stuck with me at the time was he gave me the exact number of Craigslist listings that said I want to rent someone's bedroom.
And it was actually a reasonable number.
It was like 30 in the Bay Area.
But given that you had to literally type it in and... you know, sort of have the epiphany yourself.
I was like, that's a lot, actually.
That's like probably a real market there.
And I was already, like, as soon as he said that, I was already leaning in.
And by the time he finished his three-minute monologue, I was like, this is the coolest thing ever.
I need to invest.
Yeah, and I think Airbnb was a good example, where he was solving his own problem, saw an opportunity.
Wasn't like talking to people hey, would you do this sort of thing?
And people would have said, you know, if you'd sampled it on people.
Definitely would have got feedback that was like, no, like very, very high risk.
Like that's a good example where you had sampled 10 random people.
Good chance that nine plus percent would say, no, I don't want to do that.
You know, it's really interesting.
I was just watching Taylor Swift's acceptance speech at this award show.
I Heart Media something or other.
And she gave this really powerful speech that when she was starting out she was just kind of at home working on songs, learning piano, just in a room on her own.
And had thousands of hours to just iterate and learn and get better versus today.
If you were to do this, you'd be posting it, sharing it.
People are giving you feedback constantly.
And her advice is just like find ways to just not expose yourself to people for a long time.
So I have a couple of friends who are like in artists in the music industry.
And I think what she's saying is one of the reasons why it's sometimes difficult for artists who had success to recreate the success.
Because the first success was not data driven, was not customer feedback driven.
It was like, I'm creating this and it's resonating.
Then because they have an audience, someone, either they or their manager or whoever, the label, blah, blah, blah, blah, wants them to get feedback.
And it creates derivative, you know, sort of works.
Not strictly legally, but like derivative works that are less inspired.
There's a podcast that Jack Altman did with my friend Alex from the Chainsmokers.
He actually talks about this at some length that...
They created this song that actually didn't resonate with their normal audience, but actually resonated with a different audience, which is interesting.
So I think you can get trapped with success.
It's a good illustration, actually.
There's also this concept of the ugly baby in Creativity, Inc.
I don't know if you read that book at Catmull about every idea at Pixar, like every great idea, starts as this ugly baby that no one wants to like, help and pay attention to and just like.
Get this out of here.
Exactly.
I mean, that is actually the startup.
Like I use this prism as an investor, which is when I make a seed investment or shares a investment.
Let's say I want half of my friends who are VCs to laugh at me like literally laugh, because I know most of the people I compete with pretty well.
And so I'm running this algorithm through my brain.
Are these people going to laugh?
If so, like this is a great investment, potentially great investment because it's an ugly baby.
And ugly babies are the ones where there's real alpha.
That's so interesting you say that.
I did some research recently on what are signs.
We interviewed this, me and Terrence Rohan.
I don't know if you know him, VC.
We interviewed early employee, people that have joined early generational companies many times.
Like they opened OpenAI, they joined OpenAI early before anyone knew about it.
Palantir really early, Stripe.
And so we asked them, what did you look for?
And there's three patterns.
And one of them was exactly that.
The idea, people laughed at them.
They thought it was crazy.
This is never going to work.
Palantir, for example, OpenAI, for example.
Yeah, my parents used to laugh at almost all my jobs in tech.
It used to be very funny.
They thought I was going to be homeless because most of it did not make sense to them.
Classic parents.
No idea what the hell people do in tech.
They did appreciate Stripe, though.
My mom always appreciated Stripe and always tried to lobby me to invest, and I finally listened.
Nice.
Good job, mom.
She earned her keep.
Okay, we just shifted perspective because Keith's iPad was dying.
Classic.
That's maybe the downside of the iPad.
The downside of the iPad is I use it too much.
It's like, that's product market fit.
Okay, I wanna actually follow up on this discussion we're having about just finding great companies.
A lot of people are starting AI companies now.
There's so many launching.
So, as an investor, I'm just curious what's a sign that this is a worthwhile idea, considering the endless number of startups launching?
And maybe what are some just like flags that like, okay, maybe don't work on that idea?
Well, the existential question everybody talks about these days is you know, are the foundation labs just going to be so proficient that there's no oxygen?
Because if you're building a successful startup, you need to build for like eight to 20 years into the future.
Like whether you just discount a cash flow analysis or some other prism, it doesn't matter.
Ultimately, you have to build for something that's durable for decades.
And the rate of progress by the foundational labs and not just one multiple of them really does start creating questions about the sustainability of even companies that look like they're thriving in the short term.
So that's one question.
The second question I'd ask is very typical.
I've always asked this question for like 25 years, which are what are the accumulating advantages of this startup?
You do want to believe that over time you create an unfair advantage and there are different species of accumulating advantages.
You know, the one that people immediately gravitate to, but it's only one illustration of.
A set of options is network effects, but you want something that over time makes the business better and better and better, arguably easier and easier.
At some point,
Do you see those sorts of things at the beginning, like when you're seeing, you know, seed stage startup?
Yeah, it's a great question because I think people can conflate two things.
There's a difference between seeing it and understanding the potential.
So what I'm looking for when I need a founder is can they articulate where the accumulating advantages can be in theory, conceptually?
They don't have to have demonstrated it.
Yes, there's an occasional example.
Once every five years you might find one where early you can actually point your finger on it empirically.
But that's way too strict a bar for an early stage investor.
But I personally want the founder to articulate to me where they can build accumulating advantages and maybe even sequentially identify when they would start either taking advantage of them, leveraging them or measuring them.
So when you're looking at, when you're evaluating startups these days, I know this is like a very hard question to answer, but just what do you?
Is there anything in particular you're looking for that you get really excited about?
I'm a founder driven investor.
So the only thing I really care about is does this founder have a non-zero chance of changing an industry or the world?
And if they do, for a seed or series A investment, I'm in, period.
Don't ask any other questions.
That's all I need to identify.
Not every investor who's been successful has the same algorithm they're running.
There are technology-driven investors like, I would say, Mark Andreessen's, probably like someone like that.
Vinod's a mix.
He's both founder-driven and a technology-driven investor.
There are investors who are sort of product slash market-driven investors.
My colleague David Wyden, I would say, is that.
I think Alfred, Lynn and Sequoia is mostly that.
So you can have different sort of approaches, mental models, paradigms.
But for me, it's, is this founder extraordinary?
Do I have reason to believe that this founder is the next Brian Chesky?
You mentioned that you're an investor in all these companies you listed are doing incredibly well.
And you're on the boards of a lot of really successful, incredibly good teams and companies.
Is there just something they are doing, the way they operate, that is different from companies that are not as successful?
I think the subtle signal, let's say very early, is speed.
And it's one of those things that's easy to say, but let me try to be more concrete.
There's a tempo, an operating tempo, that a successful company develops.
That develops very early in a company's trajectory.
And he's incredibly impressive.
I remember when Rolof Bote was on my board at Square, he led the series B. So he joined our board.
And six months in so two board meetings in.
He said to me he's like I haven't seen this kind of tempo since our PayPal days.
And he'd been a VC at that point for nine years.
And I was curious, I said, like, you know, what are you noticing?
And he's like, at board meeting acts, you guys identify an opportunity or problem.
And by the next board meeting you've shipped solutions, addressed.
It featured just constantly consistently.
And I think that's right.
Like, so...
The time between the seed and series A at fair was pretty tight.
And I remember at the time, my chief of staff was Deleon Asparoth.
And Deleon said to me after the second fair board meeting that he shadowed me at.
He said if there's one company in Silicon Valley that would cause me to leave being VC, it'd be fair.
And I was like, Interesting.
Why?
It's like the pace of execution.
And his answer was exactly the same as Rawls.
He's like, there is something slightly off about the next morning meeting.
Not only have they identified the root causes, but they've shipped and reacted and measured the impact of the solution, and that compounds that speed really does come out.
So that's just one a trait and, but you see it, it in like it did lead me to, for example, preempt the series a of ramp.
So i led this seed in like mayish of 2019 and gave a term sheet to preempt the a in september, so pretty quick.
One of the two signals was how FastRamp was able to be on the precipice of shipping the cards.
I'd been working in financial services for a long time at that point, you know, 19 years or so.
And there's just a lot of moving pieces to ship a car.
You need these program managers, you need the sponsoring bank, and you need this and this and this.
It usually takes nine to 12 months, best case nine.
Ramp was on the precipice in like three months.
And I was like, oh my God, like I've just never seen that velocity.
That was one of two, maybe three inputs.
And I was like, Yes, it makes sense to double down already, even if we haven't shipped anything yet.
So I think that's one.
Critical density of talent, you see companies just creating an unfair advantage.
The team was X when you invested.
It's now, wow, this team is getting better, you know, deeper, better, et cetera.
So that's another signal.
The third thing that I've noticed, though you know, is I think they have a different hiring philosophy.
Ultimately,
And maybe there's exceptions to this, but most of the companies I work with that are thriving have basically skipped hiring senior people, senior experienced people, mostly internally good talent.
And I think that model has worked really well.
It's definitely true of ramp, definitely true of trade Republic.
It seems to be a mostly common ingredient, but there's probably exceptions.
Wow.
That is an incredible answer.
And instead of traits, just to be clear what you're saying on that third piece.
So it's not hire like fancy VPs from other successful companies and instead develop people internally as a trait of internal internally and almost turned it into a competitive advantage, meaning a strategy.
Like, we're just not even going to interview people.
We're not going to try.
We're just going to promote from within.
And I think in some roles, you know, it's not like you're hiring a GC.
You know, typically right out of law school.
But although we have done that once and it worked out pretty well, believe it or not, but I wouldn't recommend that.
You know, I have this blog post, well, Delian wrote this blog post of lessons he learned from Keith.
And one talks about hiring senior people and the rough prism is are you hiring for value creation or value preservation?
If you're hiring for value preservation, typically some experience is useful.
On the value creation side, it's probably not.
It's interesting how much of this comes back to just your initial point about hiring and the team being everything.
So number two is talent density and three is helping people develop and be, you know, into the role, versus finding someone.
And then obviously speed all trickles down from just who you're hiring.
Yeah.
I mean, I've watched people use, like even chief of staff, roles to groom talent, and One company board meeting I was at this week that's just phenomenal on any metric.
And the last two.
His CMO, who's fantastic, is performing great, miraculously.
Um was his last chief of staff and his new head of product probably is his last chief, is his current chief of staff and, just like, created this institution a factory where he can absorb ambitious, talented people and, over one, two years in osmosis, train them to be senior, successful leaders.
When you talk about speed, I think about ramp for sure.
When Jeff was on the podcast, their CPO, he just like our title was velocity, velocity, velocity.
And I know they have like days.
If you go to days.ramp.com, it's like the number of days since they launched.
And they're just always looking at that number.
How long is it?
Oh, yeah.
Every board meeting starts with that.
The first slide.
Yeah.
Day 1184.
And they're like, what are they worth?
Like a hundred billion?
Not quite.
Probably not quite that much, but like a reasonable fraction of that.
Okay.
That was incredibly valuable.
Okay.
One last hot take that I know you have, that I want to make sure we share is this idea of criticizing in public versus in private.
Talk about that.
Yeah, so this is a lesson I actually absorbed from one of the great founders I work with.
And like many great founders, they have their own management philosophy.
And one of the most important tenets is criticize people in public.
When you decompose the logic of it.
It's so obviously true, but almost no one does this and very few people talk about it, even if they do it.
So, if you think about it, when you give people feedback individually, you're optimizing for the atomic unit, not the system.
The reason why to do it in public is It's more important for all the colleagues to understand that there's an issue.
It's being addressed versus like they usually have suspicions, let's say, or concerns.
And if you channel the negative feedback to the individual, they don't know that you're addressing this, that you're on top of it.
You're aware you're addressing it.
Now it's a collaborative.
And then also it lets other people kind of raise their hand and say you know what, I can kind of help with that, or you know, et cetera.
And so it becomes like a team building exercise in some way, versus like oh, you have this deficiency, go fix it yourself.
And then the rest of the company, you know, is nervous about why this problem is persisting.
When people hear this, they may it may feel like oh wait, I'm just.
It's like it feels aggressive to be criticize everyone.
Public comment.
Any advice?
For, just like, how do you not make it this like I don't know scary environment, or is that part of it?
Well, I think you want to win, you know, and there's probably an art to this.
Like I would say, you know, some of the best coaches in sports probably do a bit of both.
Like there's things they will say in front of the team and then there's things that probably you know channel to the individual player.
So it's probably a mix, you know, it could be very effective too.
It feels like you're not a focus on psychological safety as a core.
No, no, I don't believe in that at all.
Like high performance machines don't have psychological safety.
They're about winning.
For those who want a good book that's off-central casting for you.
Read Jordan Rules or watch The Last Dance if you like, but fundamentally read Jordan Rules.
If you want to be Michael Jordan, you've got to act like Michael Jordan.
Do you feel like that's negatively correlated, this idea of psychological safety with success?
For the most part.
Yeah, interesting.
I'm going to take us to failure corner.
OK, so failure corner, so that you know you talk about all these things you've done that are incredibly well.
These companies, you invested in all these businesses.
You build PayPal, all these things.
People don't realize there's also a lot of failures along the way.
Is there a story of a time you failed in your career or investing that might illuminate the doubt?
You know when things don't go.
Well, I mentioned one.
I alluded to one by accident.
I talked about being acquihired or whatever into Google and being stuck there.
So clearly not successful.
That was a slide.
So we did sell for like $187 million, but nowhere near the ambition.
Didn't really achieve any of our goals.
Product-wise or company-wise investing teaches you mostly about failures.
You know, if you're a world world-class investor in the early stages 30 to 40 hit rate is great and golden by definition that's like 50 to 60 you know percent 70 percent failing there's a little bit like those old nike commercials where there's the michael jordan one where it's like you know missed 109 game-winning shots in my career or there's The tennis one, I think it's Federer that's like, you know, something like I win 60% of my points.
Actually, I'm like the best tennis player ever, but I lose 40%.
So there's a lot of that in venture.
You definitely have failures all day long.
I think one of the arts is like... not getting too caught up in failure, actually.
I actually gave this feedback in a board meeting recently, which is someone well-mentioned, well-meaning one or two board members were like well, let's do retros on our failures.
And the company's doing really well.
So I was like, you know what?
Honestly, I'm not sure I would do this.
I was like, I don't want to deter people from taking ambitious shots on goal.
And if you overemphasize failures and people think they're going to get criticized.
This is where psychological safety maybe has some validity, which is be ambitious, be bold.
Don't worry about the failing part, unless there's things you missed that could have been factored in.
But you want people to take risk and you want people to be excited about raising their hands for very difficult problems and challenges, because that's how you create value.
And so I was like, no, let's really not do these retros.
Let's just focus on winning.
Controversy takes all around.
Keith, is there anything else you wanted to share?
Anything else you want to leave listeners with before we get to our very exciting lightning round?
I'm excited for your lightning round.
This is usually like one of the best parts of your podcast.
Okay, first question.
What are two or three books that you find yourself recommending most other people?
So the number one one is called The Upside of Stress by Kelly McDougall, professor at Stanford.
And basically it argues in an incredibly compelling way that if you want to be happy, healthy or wealthy, you need more stress in your life, not less.
So it's magic.
The evidence she marshals is effectively true. uncritiquable at the outcome level at the biochemical level it it is transformative to people to read this book so highly recommend it favorite recent movie or tv show you've uh you've enjoyed tv actually just watched nuremberg trial highly recommend uh nuremberg um there's a lot of lessons there that are applicable to the modern world.
So I won't spoil it all, but even, I'm kind of a student of history and politics.
And watching the movie, I probably learned five or ten things that I never knew before.
So obviously it's not an exciting, thrilling movie, but it's an extremely well-produced movie and incredibly useful to understand some of the travesties of history and history how to prevent them in the future.
Where do you find this?
Is that one of the streaming services?
It's either on Netflix or iTunes or both.
Sweet.
Okay.
Is there a product that you've recently discovered that you really love?
And rarely, you know, I do find.
I do find products that I'm addicted to.
Like you know, I don't appreciate about eight sleep, which is another one of my conventions is, you know, you must sleep eight hours a day.
You must prioritize sleep, even when you're very busy.
I am an investor in some somewhat biased in a sleep, but it transforms people's lives.
So I'm still addicted to that one.
I don't know if there's a new product that I've been fanatically addicted to recently.
It's Sleep Counts.
Do you have a life motto that you find yourself coming back to in work or in life?
No days off.
Hashtag no days off.
I don't believe in taking days off from workout.
I don't believe in taking days off from work, period.
Derivation, for those who are interested, is...
When Bill Belichick won the Super Bowl for like whatever billionth time, with the Patriots as back-to-back Super Bowl wins, I think he started the championship celebration parade with this chant of no days off.
So that's kind of my mantra.
And when you say no days off, are you saying like work every day?
Like, you know, like work the weekend sort of thing?
Or what do you... That too.
But so let's talk about the workout side.
I believe I've missed seven days and seven years of working out.
And it still kills me.
Like half of those, I still am annoyed that I missed.
Like I'm still working.
But I really...
Really had reoriented my schedule.
I should have been able to hit at least four of those.
And I measure it and I post it at the end of every year.
Last year, I missed none, so I was very happy.
But I don't believe in excuses, basically.
No Days Off is a proxy for I don't believe in excuses.
And do you work out every day?
Is that the rule?
I mean, literally, there's only seven days in the last seven years I haven't worked out.
That includes all kinds of illness, sickness, travel, international time zone, travel, weddings.
It was like no excuses.
Like actually every day.
All right.
And more than once, typically more than once a day.
And you've told me before we started recording, you had a Barry's class this morning.
You have another one later today.
I do.
And a Lyft.
Okay, final question.
So you were famously part of the PayPal mafia.
I'm curious if there's someone there that's like overperformed someone that you worked with that you never thought would be that good.
Honestly, no.
I wound up investing in most of the derivative companies and stuff.
And so I think I had a good spidey sense of which people had at least founder level ambition and could potentially build something.
Sorry, I wish I could give you a better answer.
Yeah.
They would have been mad at you anyway, so this is the safer answer.
Well, it depends.
If they've been super successful, they might not care.
Peter Thiel.
Just kidding.
Elon Musk.
Keith, thank you so much for doing this.
I learned so much.
This is going to help a lot of founders, a lot of people building stuff.
Two final questions.
Where can folks find you online if they want to reach out and how can listeners be useful to you?
Yeah, so x.com.
I tweet prolifically.
You mentioned my pinned tweet.
So that's probably the easiest way.
Sweet.
Keith, thank you so much for being here.
Pleasure to be with you.
Thanks for the invitation.
Thanks for accepting it.
Bye, everyone.
Thank you so much for listening.
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