How Siqi Chen’s 1-channel strategy scaled Runway to become a million dollar business?

Hello everyone. This is your host Ayush from Pesto, and you're listening to Startup Brain Podcast. Today I have with me Sikky. He's finally someone who is making our lives easier not to look at spreadsheets all day in frustration and actually derive meaning out of it. Sikky has done phenomenal things, which we'll talk about later today. I won't spill the beans just yet, but before Runway, he had a phenomenal, phenomenal company called Sandbox VR, and I'd love to dig deeper into things he did there as well. Sikky, welcome to the podcast and thank you for taking your time.

Thanks for having me, Ayush.

I remember when Runway was launched, right? The website was just like so phenomenal. I absolutely loved it. I'm like a huge Product Hunt guy and keep looking out for new products whenever it gets launched. And I remember Runway Product Hunt launch was a And you really like came out with a very different, it was like a dent, right? Like this is the way websites were built and then Runway website was completely different. What's the story behind it?

Yeah, well, I mean, this market has been around for upwards of 40 years depending how you count, ever since the very first spreadsheet was invented. And so we have a very different approach. to the product and to the mission and the user experience. And it's just very difficult to tell that story if you don't put a lot of effort and attention into it so that people understand why we're different. And so we knew that we were always going to need to invest a lot into getting the word out and telling our story. And we did the same for the website. And one of my favorite quotes, it's from Penn and Teller. Who is a well-known magician duo. And Teller has this quote about magic. Magic is simply putting so much work into a thing that it's way more work than anyone could think would be possibly worth it. And that's the story of our website. We just put a lot of effort into it and it paid off.

That's so awesome. You know, a personal confession is that when I looked at the Runway website, It actually inspired me to completely redo our website and we did, right? I run Festo and if you really look at our website, there's like one particular section which we borrowed from the Runway website, which is the made over section.

Yeah, I mean, one of our values internally is raise the bar and it has 2 meanings. One is, you know, you want to keep on growing your own bar internally, continue to improve yourself and the company. But the other meaning is we want to push forward the state of the art of what's possible out in the world, right? Like a lot of people aim for is like, oh, what is like the best thing, right? How can I like make it the best? But we think like it's, it's more inspiring to like see if you can push forward the state of the art, right? Have something that everyone wants to say, I want to beat Nicky like that. And you fall short, you'll still end up pretty good, right? You're not always going to hit it. That's been pretty important to us across the company. Yeah.

No, 100%. And I was one of those people who you really pushed very hard to, you know, like get back to the best work we can do with our website. But it's awesome. We would love, you know, I'd love to jump into the mechanics of running the company. This is one of the values you shared. I'm really curious about so many other things that you do at the company. But before we jump into it, why don't you Could you share what is Runway all about and what do you guys do?

Yeah, well, I mean, we're in one of the world's most boring domains, which is we're building software for finance. So it's called— traditionally this domain is called FP&A, financial planning analysis. And so a lot of people don't know about finance. So the way to think about finance is there's basically 2 big components of finance. One is sort of backwards-looking reporting, Like seeing what happens. So this is what people will typically call accounting, right? So you look at like how much you spend in a given month, how much money you make. The other half of finance is forward-looking. So you're trying to figure out where are you going to be 12 months from now? How did the impact of the decisions that you make today affect how your trajectory in 2 years? And that requires a lot of modeling and planning and collaboration, right? So what these spreadsheets that finance people make, do is they're basically a software simulation of a business, like a game engine, right? So it lets you simulate the business. And so we're focused on the second problem. And this is typically if you're 50, 100 or so employees having a finance team, this is incredibly difficult and time-consuming. So that's a space we're in. And the way we're different is how do we make this actually accessible to people?

Yeah.

Not just inside of finance, but also outside of finance. That's basically my story is I've been running a company for a really long time. I really felt like I never understood this part of the business and how the company works. And we figure you need better tools for thought that's truly consumer-grade to make them accessible. That's what Runway is.

That's fantastic. So as a founder, you actually didn't like this aspect of running the business, and that's really what you ended up— that's the category in which you ended up building your next business. That's fascinating.

Yeah. I mean, it's one of those things where you don't value what you don't understand, right? And so I started my first company a year out of school and I didn't think of myself as any kind of business person. And the idea that, okay, well, you know, people gave me money and I'm not good at business. Maybe I'll just hire a business person to do the businessy stuff like finance, right? But as I got deeper into this problem, I realized that this is actually like wild, right? Because we're giving young founders millions of dollars to build ultimately a business. Finance is kind of the business bit of it. And so the idea that you don't have to understand this is pretty wild. Yeah. And once you do understand it a bit better, you realize that actually this is not as complicated as I thought it was. And it's so much more important than I thought it was. Because the finance bit is not just about finance, it's actually about the entire business. It's basically you're building like a game engine simulation of the business and it encompasses everything. It's not just finance, it's marketing, it's engineering, it's sales, it's marketing.

Curious, you were talking about some of the values which, you know, while speaking about the website, would love to dig deeper into how do you really run the company and what are some of the values which you have at the company that, you know, really drives you?

Yeah. So we started with a different set of values when we first started the company. It was create magic, trust by default, accelerate. And as we, as a company, and we're now 3 years old, as we continue to execute, we realized like those values, while they represented what I personally wanted, it wasn't, we weren't using the words as much as we wanted to. Yeah. And so we did a refresh of our values about a year ago or so. And the way we did it is we looked at what people were already saying about working here, what they were saying to each other. And from those, we extracted like, this is our actual values. This is what we really do value. Wow. And the values are interesting because we don't need to say, oh, we're going to say like this particular value. We are already saying that. Right. Yeah. So some words that people were saying when they were working at the company, it's like, wow, it seems like really everyone gives a shit. Everyone really gives a shit and really cares. So give a shit is one of our values. People are good at creating clarity, right? That's what product does too. So create clarity is another one of our values. We say raise the bar a lot, a lot. And we say it in like every time we do an interview, we talk about the work that we do. We say that quite a bit. Um, and the other, the last one is, uh, create trust, build trust. And build trust is interesting because it used to be, this is a value that evolved from a value that we used to call like trust by default. Yeah. Uh, and we shifted that because build trust puts more intention into, okay, this is something you have to do actively, actually. Um, and so those are our values. It's build trust, create clarity, give a shit, and raise the bar.

That's fantastic. I love— I was saying I love the differentiation between build trust and trust by default because consciously practicing it actually enforces it a whole lot more.

Yeah, it doesn't happen automatically. You have to work at it.

Yes, that's fantastic. One thing which I definitely want to talk about is fundraising, and we'll probably do that in the latter half. But before we get into that, I want to pick up like one GTM channel that has really worked for you guys, and I want to dig deeper into establishing, you know, how did you establish that playbook and each and every detail of that? What is that one channel that you would say that you guys have really raised the bar for?

Well, that's pretty easy because we only ever use one channel.

Wow. Which one is that?

That'll be Twitter, X. Because we're actually launching into general availability tomorrow. So you might be breaking some news.

I love this.

So we're going to do traditional marketing, but we achieved our first few million dollars in ARR exclusively just on Twitter and exclusively basically through my own Twitter account, more or less.

That's insane. Let's talk about that. How exactly did it get started and What is the scale of it right now?

Uh, so I'm just under 70,000 followers and, uh, you know, all of our leads pretty much come through Twitter, a little bit of LinkedIn too. Uh, so working really well for us. Um, but I think about right when I started Runway, about a few months before, I made it one of my New Year's resolutions to get good at Twitter and social. You know, I, The thing that I always felt about marketing is people spend so much money on marketing and they end up with these websites and these messages that are absolutely forgettable. Like, I think Salesforce maybe did like a mildly good job on like, no software, right?

Yeah.

But everyone else is just like enterprise synergy, proactive, whatever the fuck, right?

Yeah.

You just, it just, and one of the things I've been thinking about is this idea of founder-led marketing of like going direct. And I think that works. And I think the reason why it works is people respond to authenticity and realness and to people and to stories, right? Not being sold a thing, but like being entertained by a thing, learning from something, being inspired by something. And so for, in particular for the product that we're building, which is, you know, we're building a finance for all kinds of companies, tech companies, building that network, that audience of people directly helps the growth of company. What's the bet? And so around that time, 4 or 5 years ago, I was like, okay, we're going to get really good at Twitter. And Uh, it was extremely uncomfortable for me. Um, and I get this question a lot. It's like, oh, I don't have followers on Twitter and I don't feel good about tweeting. And, you know, and I understand that. I was that person. I understand psychology, you know, it's like, oh my God, what if I like say something people aren't going to like it? And what if like I get seen as like just that person who shitposts on Twitter? How does that look? And the bad news is I am now definitely seen as a person who shitposts on Twitter. Like, I went to a conference and like, you know, they picked me to like say a few words. And the question was basically like, tell, tell us about, you know, how you, when you wake up, how you decide to like create chaos on Twitter. I'm like, oh my God, that person. But I would say it's like any skill. You have to practice at it and it's worth it. And it is a near requirement to be a very successful founder today to do it because, you know, your ability to tell that story and create that influence affects everything about your business, your ability to get early design partners, get customers, get investors, get candidates. I can't tell you like the majority of, and we've hired some amazing people, like, so we just hired our first marketing person. He was a VP of marketing at Flexport. We hired like 2 individual line engineers who are both VP of engineering at like $500 million companies. And most of the candidates we talked to say, oh yeah, like I follow your CEO on Twitter. And that's one of the reasons, like about Runway, like the leverage is just insane. Um, so it's super worth it. And so you have to like get rid of the excuse on why you don't want to do this.

Absolutely.

And to get good, you have to, uh, I think, uh, Ira Glass from Desperica Life has a really good analogy of how to like produce good things. Basically, the mental model is there is good things in your head, but it's like deep inside of it. And for the good things to come out, you have to first like spit out a bunch of really shitty things, just like awful things, right? And so if you, if you just keep on going and you, you, you spit out all the things that isn't good, eventually something good will come out. And that's how you get better. And that's what you have to go through and be okay with it.

You know, I did this a lot a few years ago. We were building something in education and during COVID it looked like we had really good PMF and I was very active on Twitter and we were, you know, the advantages which you're talking about was really there. And then And as COVID went away, it kind of like went all downhill, right? Like, PMF suddenly disappeared and we had to struggle and then pivot later on to recruitment or things of that nature, right? But I'm going to take away from this podcast and get back to my Twitter game and get much stronger at it because I do realize it was a lot of organic impressions for free. And you would get extremely high-intent leads, right?

Yeah.

So, I want to break down your process of creating content on Twitter, right? I do remember when I was starting out tweeting, one of my friends, Ryan Hoover, a founder of Product Hunt and just a phenomenal human being, I asked him at one point of time that at Product Hunt, what's like the best community tool because you know, product community is probably the strongest community, communities out there. And I was like, what do you use for building a strong community? And he just said Twitter. And it's like the, you know, when you write a tweet, the reply section is the place where your followers can express their creativity. And I was like, whoa, I never really thought about it that way, right?

Totally.

But let's get into the process of you creating content. So you have to get out a lot of thoughts and all of it will be trash, but that's okay. How do you do that?

You know, I don't know. I just think I'm just on Twitter quite a bit and, you know, timeliness really matters. I think, so Twitter and LinkedIn are really different. We started with Twitter. And I don't know that I have a good technique for Twitter, actually. I think like it's more about psychology than technique. I have some draft tweets, like I have a library of draft tweets. Whenever something comes to me, I'll put it in. Mm-hmm. I don't know how to say anything about content. I have a technique for optimization, which I'll talk about. But in terms of content, I would say like the biggest thing isn't just like having a large library of ideas. The biggest thing is like, when you are consuming content anywhere, whether it's on Twitter or having a meeting or just thinking, the barrier for you to like, think about, wait, could that be a tweet? Should be really low. You should be thinking about that. And could this be a really interesting tweet? And so, okay, we have a meme library Slack channel, uh, in Runway where people are just like posting interesting memes that we could repurpose at some point. So we started doing that. That's fairly recent. But in terms of like actual like optimization techniques, so there's a few. The first one is I delete probably 90%, 95% of my tweets. Very few people know this. And I delete them within the first like couple of minutes. And so the basic, the heuristic is if in the first couple hundred views, Your ratio of likes to impressions is at least a 3 per 100 impressions or more, it's probably going to be a banger. And if it's less than that, probably like it's not going to work and you can just delete it and people won't see your bad tweets. Now, why do you delete the tweets? Right? Why don't I just keep it up? So people think that the way you get more followers is through a viral tweet. That's actually not the case, which like Blew my mind, but if you think about it, it makes sense. You don't follow people from a viral tweet. You can't actually follow people from a tweet in your timeline. The way you follow a person is you see the tweet, you click into their profile, and then you follow them. So what that implies is the nature of the tweet content makes a difference. You want, it can't just be something about some random thing. It's got to be about something that gets people curious about you. especially because of your profile. And then when they're on your profile, then the way you get follows is like a basically conversion rate from the content on your profile to a follow. So your picture, the bio, the top pinned tweet, the top 5 tweets, they have to all be amazing to optimize for a conversion rate. And so if you go to my profile, basically I extensively curate it. I have very few retweets. Every Every tweet that I tweet in the top 5 is going to be a banger. And so you're looking at that and you're like, okay, I'll follow this because it seems like there's more interesting content. That's basically the high level of how I think about it.

That's amazing. That's simple and things which I didn't think about earlier at the same time. I've been trying to like mostly tweet with the, you know, like with the intention of just creating a viral tweet, but you're right. It does not translate into followers.

Yeah, stories help, right? Like, I think the other thing is, you know, a lot of people tweet like these like thought boy tweetstorms things and that's mildly interesting, but people are following you then for like that particular type of content, not for you. And so I think it's important that people like want to follow you.

That's personal.

Yeah, all kinds of things. And so typecasting yourself into one particular type of format is like not a long-term winning strategy either. Um, but yeah, for in general though, for other types of content, one of the things I do is things like this. And sometimes we do podcasts internally. Uh, it's not like published anywhere, but just Asking you the right questions can sometimes lead to good content. And so my LinkedIn content is actually mostly ghostwritten. And the way it comes out of it is I'm having a conversation with our writer in-house and we'll be talking about whatever thing and they'll just take like some of the interesting insights and turn it into content that we edit.

Nice. That's fantastic. Glad to hear that. But I think like for Twitter, there are really core 2 insights which really makes a difference, right?

Yeah.

Let's start with the VC brag tweet, which was quite viral a few days ago.

Okay.

You were speaking about an investor who was trying to take advantage, or you did not have a good experience. What was that experience all about?

Yeah, I mean, sometimes investors will do not nice things, and I think the main message is, It's really on the founder to do their due diligence and do references. And the thing is, when a VC hasn't invested but is really interested in investing, or when a VC has invested and things are going really well, you learn really nothing. It's only when things go south or when a VC can take advantage of the situation and does or doesn't where you actually understand like the nature of a VC. And there's great VCs that are very high integrity, trustworthy. Those are the ones that I love to work with. And unfortunately, there's many VCs who don't do that. And founders don't talk enough to each other about this. And so I get it, right? Like people are just happy to get a term sheet. And if you only have one term sheet, then you take the term sheet. I get it. But if you are in a position of choosing more than one, then it is very important and healthy to do your homework.

Absolutely. I remember there was an app when I was fundraising, which was really helpful, particularly with this, an app called Backchannel. I'm not sure if it's—

I'm on

it. You are? Yeah. So Backchannel used to be pretty amazing. I wonder, I think like there must be a backchannel for investors as well.

Yeah, there's like no one well-known, you know, VC rating system. I think incentives are like too scary for people generally. Yeah.

Yeah, we need an IMDb or an equivalent G2 for VCs.

Well, there is actually. Let's see, there totally is. It's the Y Combinator has one. But obviously—

Oh, really?

Yeah.

That's awesome.

Yeah. That's where you have VCs who are blacklisted and like all kinds of reviews and comments from founders on it.

Gotcha. That's awesome. Well, I think we're out of time, but this was really amazing. Thank you so much for taking your time, Sikhi. And I really, really enjoyed having a conversation. Hope next time we get more time, we can dig deeper into so many other things. But this was—

Yeah, let me know.

Absolutely. This was lovely. Yeah, lovely catching up.