Delian Asparouhov’s Lessons From Keith Rabois

Hey everybody, it's Eric Torenberg, co founder partner of Village Global, a network driven venture firm. And this is Venture Stories, a podcast covering topics relating to tech and business with world leading experts. Hey everybody. Welcome to another episode of Village Global's Venture Stories. I'm here today with a fan favorite friend, repeat guest, Delian Asparohav of Founders Fund. Delian Wel, welcome back to the podcast.

Thanks for having me back. I imagine this time around we're probably not going to talk as much about space.

Not as much. We're going to talk about Keith Raboy and lessons you've learned with him working so closely over the past few years and in some of the essays that you've written about it and how you've built upon that knowledge. First, I want to really talk about talent and talent identification. That's something that both you and Keith really think a lot about, have developed a reputation for. You know, Keith's philosophy has been since PayPal's, how do you identify mispriced assets? So I'm curious if you talk a little bit about that. Maybe first we'll start about evaluating founders and then we'll move more into the hiring. How is your sort of scope or not your scope, your sort of lens of how you evaluate founders evolved in the, you know, three plus years working with Keith?

Yeah, I think there's, there's two parts of that that I've really come to appreciate. The first part is what I call like, are you the right superhero for this story? I think when I maybe had a more naive view of venture capital, I kind of thought there was just like a generic like best founder or best, you know, traits that basically like work for almost like any business. And I think starting to see both from having worked with Keith and seeing a variety of the different companies he's worked with succeed, but then also seeing him evaluate a variety of different types of founders, have seen that the necessary components for success for different types of businesses may be very different, like at the very like high level. The way that I like to describe it is like, you know, Zuckerberg is really great for Facebook and, and Elon Musk is great for SpaceX. Elon Musk would probably be terrible for Facebook. And Zuckerberg I don't think has any idea how to like build a rocket. And so that almost always ends up sort of being like the primary lens that I now view things through of basically like, why is this like end of one person? And for sure there are some companies that it's not like there's only one person in the world that could, like, operate them. But it's thinking, like, why is this person, like, sort of the top 1% for this particular company to go in? And so, for example, with some of my more technical things now it's around, like, has this person had a really deep technical background around it? For some of the other problems that I've worked on with Keith, it's been, you know, how is this person's entire career almost like, led up to this particular moment where, like, it's not just like, you know, an idea that they came up with on a weekend. It's something that's been like, sort of itching them over the course of, like, maybe several jobs that they've had or several things that they've done, but, like, before they start up. And then the second factor of it is I do think there are some level of, like, shared underlying traits that like, sort of all the best founders have, which is sort of around, you know, grit, resilience, bang through walls, some level of, like, you know, creativity. And then I think one of the things that I've even started to index on more that I don't always necessarily hear Keith about, but one thing that I really have started to find myself indexing on, especially after, like, more like a series A financing, less so than a seed, I actually will spend more time, like, evaluating the team that they've, like, hired around them. I think, you know, one of the quotes that, you know, borrowed from Vinod and that Keith, you know, repeats a lot is, you know, the team you build is the company that you end up building. And so, you know, recently had a, you know, company where I was in the sort of, like, let's say the home construction space and analyze their team and, like, they had more deep engineering talent from, like, Tesla, you know, automotive industry, SpaceX than like, almost every other home construction company combined. And I almost like, indexed more off of that than even, like, off of the actual founder, because it's like, okay, well, this founder can recruit these types of people. So irrespective of how good I think the founder is, look at how good the people are that they're bringing on. They'll keep doing that. So those are probably, like, the three lenses that I operate on. I've definitely heard Keith talk a lot about, you know, let's say, number two, the like, great resilience component, but I think the, like, superhero for your story. And then also, who are they, like, bringing in? Around them have been things that I've seen him do but maybe not talk as much that I've found very valuable as like my sort of let's say initial three lenses. I feel like the combination of those three always helps me evaluate and obviously not everyone's going to be stellar on all three axes, but that tends to be how I at least start off.

Yeah. Is there another quality that you've sort of recalibrated over time that maybe you thought was important but is is less important now than you used to think or vice versa? Something that a re a reason you didn't think that's important but is actually really important whether it's you've accepted this founder or rejected this founder.

Yeah, it's probably mostly the component that has to do with what I would have looked like as a founder, which is 19 year old dropouts are not particularly great enterprise healthcare entrepreneurs. It turns out like selling into enterprise is already difficult, let alone like selling into healthcare is difficult. So I think if there's one area that I sort of become a little bit more wary of is I think, you know, college dropouts are great at solving let's say consumer social problems and things that are purely used by them and their friends. I think they can be good at sort of problems where the technical differentiation is truly all that matters. Like the example that I think of here is like scale where they're sort of go to market. Didn't have to be that crazy different because like a lot of people were already using tools like theirs. It was more just like could you basically out compete on cost interface etc. Or maybe like Stripe is another example of this back in the day where like you know for sure Patrick and John had had a prior company where they had like you know, how to interact with some level of enterprises. But it's not like their differentiating factor was like their true like enterprise ability early on. Um, and so there's probably been something that I've shifted around not necessarily feeling comfortable with having super young inexperienced founders tackling you know, companies that require them to get large companies signed up.

Totally. So let's talk about the evaluating young people because that's where you know Keith and Peter talked about a long time ago. But you know, before they. The way as a startup you compete is by getting talent that hasn't been priced yet. Young people or has been mispriced young people is often the easiest way to get people who haven't been priced yet because other people haven't seen them. You're a teal fellow. I think you're in the first cohort of. So you have an extensive network of young people. We've sort of, you know, sort of talked about that. Some of these people are flourishing, doing amazing. Some of them are sort of in this netherworld that they. Have you had a name for them? I can't remember. Haven't yet figured things out. How do you know? How do you evaluating, hey, this person's just never going to figure it out in a way that is going to lead them to be a billion dollar founder or hey, they just haven't figured it out yet.

I think a lot of the time the like fundamental principle and people talk about this a lot is like you're trying to invest in this like the slope as opposed to like where the like individual marker is. And I think especially now having been in San Francisco and amongst some of these, like, let's say, you know, when I was first out here, like 18, you know, a bunch of like sort of dropout college kids, you know, you start to get a few different data points about like somebody over time. And so there are times where this can swing very positively. Where, you know, recently, you know, maybe about a year ago, was considering this sort of like seed stage investment at Founders Fund. And I met this founder once before and now for a second time I was like, okay, they like have made some level of like customer progress. They've made like, you know, they've hired a couple of interesting people. But I was like, this is okay, nothing like super, super stellar out of this world. And then I learned like the founder was actually like 19 and had made this level of progress over the course of like from being 18 and a half to 19. And I was like, okay, now this is in a completely different bar. Like I thought this is somebody had like multiple years of experience, like had worked at a company before. And I was like, everything that he's doing is kind of doing the basics well. But I was like, whoa, if he can do the basics well at 19, and this is where he's like on this trajectory. Imagine just continuing to like extrapolate this upwards. And so I think there are some people where, you know, I've known them for almost a decade now and I've actually like analyzed the data points from when like I first knew them to like now there's actually like not that much different. And sometimes those people can like stumble upon success. But there'll be somebody who's just like obsessed just with dev tools. And I've watched this person be obsessed with dev tools for like eight years. And their original dev tools were interesting, and the current dev tools that they're working on are interesting. And maybe one day their particular niche or interest is going to become, like, something massive. But they're kind of just like, stuck on this, like, fixed mindset. Same sort of problem that they've been trying to tackle for, like, eight years. And at some point, I think you have to get over. You know, I wish that my EMR for autism therapy had been more successful, but I didn't, like, let myself just get stuck on it for, like, eight years, like three and a half years. Eventually I was like, okay, I'm banging my head against the wall. I think it's fine to bang your head against the wall if you're at least making some level of progress. If you're kind of stuck in the same situation, at some point, you probably need to reevaluate and be willing to kind of, like, reset and, like, let it go a little bit.

And this was Nightingale, right?

Yeah, this is Nightingale. Back in the day, I definitely had, like, this very serious conversation with God. I think it was actually Daniel Gross who really, like, harped into me. We were, like, on this, like, hike once, and he's like, darling, you're in a low leverage situation. Like, what are you doing? You're just banging your head against the wall. And I was like, you're right, I haven't banged your head against the wall. And I probably could be in a more highly leveraged position. So I thank you for that. That conversation definitely swung me to being like, I need to kind of let this go.

Yeah, I banged my head against the wall on Internet rap battles for three years. Maybe if I spent eight years, it probably still wouldn't have been successful, but it was a good time. There's this one interview that I did with Keith where he talks about you and he says, I would have Keith or I would be analyzing CEOs and I'd have Delian give sort of the first pass. And over time, basically, he was able to channel exactly what I was looking for. What were you sort of. Besides what we talked about currently, what were you sort of recalibrating for? Perhaps another version of a similar. Different question is, how is your sort of investment? And we can go beyond the founder, but investment judgment changed in terms of three years ago to now.

Yeah, I mean, I will say, you know, osmosis is, I think, by far the most effective way to learn. If there's anything that I've come away from these three years, it's just like, there's no better proxy for it. You can read as many books as you want, you can read as many podcasts as you want. But like, honestly, the only way to like, learn how really great people work is to like work very closely with him, with them, With Keith in particular. Now that he's, you know, an investment partner, it means basically being with him all day investing. But back in the day when he was an operator, he had a, you know, direct reports at work with him. And so with young people today, sometimes I tell them, like, don't sweat too much. Exactly. Like what company you're working for, what problem you're working for, like, find somebody that you think is a career that you'd like to model yourself off of and figure out how to basically report to them and actually like work with them on a very, you know, continuous basis. And so I think there was a lot of different things that I learned around assessment of talent, both on like the side of like founders and like executives. The executive is one is sometimes a little bit easier to articulate where, you know, As a former 19 year old MIT dropout, I had barely spent any time with any sort of like quote unquote, like financial types. And so if you had asked me to, you know, interview a CFO three years ago, I wouldn't even like, I didn't even know like the process for even beginning how to possibly do that versus now. I've actually gotten to spend time with like people that have been like CFOs of public companies, CFO of like multiple companies in a row that have like, you know, ended up having billion dollar plus outcomes. And so you start to both see what types of questions and how Keith digs into these people and how he analyzes. But then also you have a bar for the future people that you're interviewing and in terms of like how to meet. And this actually happened once about a year and a half ago. One of our portfolio companies was basically interviewing a cfo. And typically when Keith and I would do these interviews together, we would actually immediately sync right afterwards. But on this particular day he probably had like berries or something like that. And so for some reason he had to go. But the founders emailed us the next day. We're like, hey, you know, what did you guys think of as a cfo? Should we hire him? And Keith responded in like two minutes and was like, yes, absolutely no brainer. And I actually was shocked because I thought it was a no brainer, like absolute pass. Like this person was not the right fit and So I ended up like running over to Keith's office and I was like, hey, like I've seen you do CFO interviews. I think this one was not a good CFO interview. Like here are the things where he did an index off of. In particular this guy, you know, he worked for a very prominent company that, you know, a lot of people would know that was sort of faltering. And I asked him like, you know, what would you have done, you know, differently or what do you think of the strategy that the company's taking? And he basically just had like a non answer. He was just like, oh, I don't know, like the finance team could have been a little bit larger or something like that. I was like, that's just not how an owner thinks. Like if he was a true like owner of his business, like, oh, here's where I disagree with the strategy. Here's what I would have done differently if it were my choice and all these allocation of resources, I would have done X, Y or Z. So actually like convinced Keith of this and he was like, you should go like talk to the founders and see like what they think of like some of your criticisms. We ended up like not hiring that CFO and instead hiring this other candidate that I was a huge fan of and obviously we'll see how it plays out in the long term. But huge fan of this other, other CFO candidate. And so what I'd say is I think there's some amount of from learning from Keith, the osmosis that allowed me to sort of assess executives on a cross disciplinary basis. Right. So I now like I could do CFOs or COOs or you know, general counsels, a variety of different types of roles. Just from having both been in a lot of those interviews and then also having people to compare to the bar against and in the founders. It's somewhat similar of at some point you start to see that while Elon and Zuckerberg are really, really different, it turns out like Zuckerberg and Kevin Systrom though actually do have some like underlying similarities. And so you start to see the personality traits or the types of founders that are good for various like types of businesses. And so one of the examples that we think about a lot of Founders Fund that is actually a somewhat counterintuitive example is the more technical that a company is, the more critical it is for that founder to be extremely good at storytelling and fundraising. And so you see this play out on like the extreme end with like Elon just being able to have like Crazy market caps at both like Tesla and SpaceX that make almost no sense in comparison to like the financial fundamentals. But it turns out that scales all the way down to even like seed and Series A, where partially the progress of these companies is sometimes really difficult to articulate. The financial metrics can take a while to catch up. And so even more so than actually an enterprise SaaS business, you have to be really, really good at fundraising and storytelling, which would be maybe counterintuitive. Like you think, oh, more technical companies, you just need somebody that's actually just more technical and be able to raise those. And like the fundraising and storytelling doesn't matter as much versus actually the reverse. I'd actually much prefer to sometimes invest in a technical company where the like founder has only a modicum of understanding of the technical basis but is a really great storyteller. And it's paired with like some sort of CTO as opposed to the reverse where they're not a good fundraiser. And so I think, you know, to expand the answer on the founders, it's. You also start then to see, okay, here's what matters when it's a marketplace founder, here's what matters when it's an enterprise founder. Here's what matters when it's like consumer social. And so you start to pick up on all these sort of like, you know, micro behavioral traits that are important for each individual.

And can you give a couple more examples of some of those archetypes? Maybe it's marketplace maybe touching a little consumer on some of the different things, just paint more of a picture for us of different archetypes for different fields.

You know, let's take the world of like local operations marketplaces, right? Like in the past, you know, in the past couple of years we've invested in Bungalow, which I call as a local operations wanderjoint, which is also in the real estate space. We recently did this company, 10, that's down in LA, that's like a sort of competitor to Instawork. And all three of those I'd say in some ways whenever I was indexing off those companies I was thinking entirely like, how does this person compare to like Tony or Doordash? Okay, so what are the things that they need to be? They need to be incredibly like detail, obsessive, financially oriented and effectively like have an infinite like sort of like work ethic that in comparison to like a consumer social founder, consumer social, you need like attention to detail, but not attention into like in person detail. It's like pixels and you need like an Insane work ethic actually not necessarily. You need somebody who can kind of come up with creative like out there sort of like ideas and can kind of you know, empathize and understand people in counterintuitive ways. Like if anything with the consumer social founder you're looking for them to teach you about some sort of like behavioral trait about people they didn't necessarily appreciate. But when they say it it sounds very obvious versus like I don't care about Tony at Doordash like explaining to me that people want food and that being counterintuitive it's like no, he was want the food fast on time etc. And they might have some like interesting motivational mechanisms for getting the dashers to work really hard. It's those types of things of like what is this person like extremely anomalously good at? It's like on the local operations marketplaces it's again this like detail financial especially in these like low margin businesses versus like if somebody worked at Google early on they didn't need to like know anything about finances. It was a 95% margin.

What about like Fintech or Enterprise?

With Fintech and enterprise there are some interesting components I'd say with Fintech the ones that I've seen work most successfully have had a very sort of like broad understanding of the industry. I think Fintech is one of those worlds where it's really difficult to sort of innovate completely from scratch. You need to work with like a bunch of pre existing partners. So you know, as an extreme example on like the upper end, we recently just announced this seed in series A of this company called Ramp out in out in New York that's sort of a you know, up and coming company in the corporate card space. And they're a perfect example of the founders had previously worked on a consumer financial services thing that was in some ways like much easier. They basically would like analyze your email receipts and find you automatic discounts on like you know, travel, restaurants, hotels, things like that. But they ended up getting acquired into Capital One working in like the card division in Capital One. So got a really good understanding for how that ecosystem worked. And so in some ways they were like the perfect founders for being able to then understand okay, what are the current sort of incumbents, what can we build on top of and what are the current incumbents? Sort of like missing that it feels like much more necessary where you need a ton of like you know, industry domain expertise versus in the world of like local operations marketplaces you don't really have to have a great understanding of how GrubHub works in order to be able to like innovate against it. And so I think different industries also will sometimes.

Why is that? Because it's less competitive or because it's.

I think there's like less need to have domain expertise in order to succeed because you're not as reliant on the pre existing incumbents like in financial services. Right. You know, you can't totally sort of like read, invent the wheel from scratch aside from like, let's say the world of, you know, crypto. But it's not exactly like my area of expertise in like real world financial services. You know, Plaid maybe being a recent example of this, like they had a lot of partner institutions that they had to keep very happy and make sure that they were able to like access that data. Turns out a lot of financial services ends up working that way, whether it's people that you need access to data from or people that you need access to capital from. Like, you know, we're now in this age where like almost every single lending company I would describe as a quote unquote fat startup, where the only way that you end up actually making succeed is being able to raise larger and larger amounts of debt. And that means understanding, okay, what are the debt markets look like, who would I partner with, how do I keep them happy? And how do I make sure that I start up on that flywheel of raising debt alongside equity. And so those just require a much more sophisticated understanding of the current market. Whether again it's you know, debt, the underlying banks, you know, everything from knowing how SYNAPSE and marketo work so that you know what types of products can be built on top of them versus where do you really have to rip and replace and basically build your own version in house enterprise.

Are you looking for more repeat entrepreneurs or people who have domain expertise and that specific focus similar?

It's definitely a less of a, let's say core expertise area for both me and Keith. Like we don't do a ton of like just pure enterprise SaaS, but of the areas that I've enjoyed, you know, investing or have seen some level of success, I'd say are like twofold. One are like people very much like scratching their own enterprise itch. Right. Like we recently backed this company that is, you know, still very much in stealth, was basically like run by designers trying to build sort of better tools for asset management and media management for, for designers and so just had a really deep understanding having you know, she was somebody who had run multiple design teams and really understood how to. She was basically her own customer. And so she knew really how to speak to that. I'd say that's either one part. And so either you yourself are basically the customer and you are probably in the like top 1% of types of customers. Like you are truly the model. If you were to adopt it, everybody else would adopt it because you're sort of the best in class at what you do is one area. Most founders obviously don't have a thing that they're already best in class at and have done at multiple enterprises. And so the opposite sort of is like the customer obsessive ties of types. You know, the founder of Zoom, I think is like an extreme example of this of like he's on Twitter any single time that like, you know, somebody asks about like video conferencing and you know, recently invested in a founder that the Zoom founder is actually mentoring and was similarly extremely obsessive about the customers. Like, I, you know, I thought I, you know, when I was running Nightingale, I was like, I talk to my customers a lot. Like Dylan, you talk to your customers like five to ten hours a week. This dude literally spends like 60 hours a week. Like he like has his full time job and then he's also like full time in addition to just like on the phone with those customers at all times at all hours, just like catching up with them, getting to know them, understanding what their real problems are. And so you either basically need to be your own customer or be customer obsessive.

Totally. And Keith or no Keith, how have you evolved your thoughts on investing in different markets? And Keith is famously sort of a bottoms up investor. How have you thought on, hey, you know, three years ago I might have invested in this market, but now I'm not. Or vice versa. Or your approach to market.

I think one thing that Keith has somewhat of advantage on, especially in comparison to like a more junior vc, is just his level of like inbound means that he can be almost purely reactive. And so he's allowed to be much more bottoms up. I think sometimes as a more junior investor, it can be difficult to be purely, purely bottoms up. Obviously I try to do some things, you know, whether it's like this podcast, these essays, Twitter, etc. And that does contribute to like some level of inbound. But even then, some of like the truly, let's say like best series A's in the world are going to end up going to like, you know, Alfred, Lynn, Keith, you know, Albert Wenger, et cetera and so competing against them requires, I think, some level of, like, outbound. And I think by default, some level of outbound requires having some level of a thesis. And so in those types of situations, I tend to just look at the markets where I feel like I'm actually just by default from either my work situation or prior hobbies or habits. Learning a lot about, obviously, space is the easy example given, you know, given we talked about that on a prior podcast. But, you know, from Osmosis through Keith, I've also learned about a couple of other industries, including financial services, real estate. And so in those, I do start to, like, form hypotheses around them.

Sleep.

Yeah, sleep. Sleep is another perfect example where, you know, by investing in 8, I hope that company ends up doing well. But also every single sleep entrepreneur now by default, basically, like, reaches out to us and actually have, like, pretty strong opinions and understandings of the market now, where I actually, like, sometimes know what I'm looking for and I'll sometimes even talk about what I'm looking for, and eventually a founder will pitch me. So, like, literally the other day I had a founder pitch me on this, like, whole sleep thing, and about 45 minutes in, I was like, I can show you. I basically wrote this deck myself, like, a year ago trying to incubate this idea. I love this idea. Let's talk about why or why not you the right person to actually, like, found this company? Because I know exactly, like, I've already almost gone through the idea maze myself. Those tend to be obviously a little bit more rare. Like, at any time, I would say I study it, like, less off of here, the markets that I overall am obsessed with and more like, here are, like, particular things that I'm seeing, like, the market needs based off of just seeing all these, like, different companies. And so in sleep, that might be like one idea. In real estate, it might be one idea of financial services. And then typically, if anything like that market almost like goes on the back burner for a little bit for me. And then eventually another idea pops up in my head and then I start, like, diligence, like, every single company. So, you know, for example, in the world of like, fractional homeownership, was super interested in this and ended up, like, you know, talking to every single entrepreneur in the space and finding the one. I was like, okay, here's the one that works. And the thesis being, hey, fractional home ownership is going to be a wave that rises. I'd like to back whatever I think is sort of like the Best company in that wave.

Yeah, and let's just both of those really quick on fractional ownership.

What's the.

And your company might be in stealth, but what sort of the winning approach or what type of thing were you looking for versus versus not looking for what was important. Not important.

I'd say with most of these, you know, ideas that I'm bringing up, it really does just basically come back to which founder is going to be the superhero of this story. And so when I think about the world of like fractional home ownership, it actually like resembles much more the world of like REITs in some ways than it does actually like traditional startups. And so I think you want a founder that has expertise in those areas is potentially maybe worked in that field before. And so, you know, I don't want to like disparage the other companies too much beyond like the one that I invested in, but I found that like when I was analyzing other companies, I didn't necessarily find that there's this underlying traits that I was looking for because I was like, you know, I think there's a lot of complexities in fractional home ownership, especially in comparison to, let's say something like Opendoor. Partially because Opendoor will use debt to basically scale up or they'll use debt to basically purchase the homes. But Opendoor is a marketplace and so those homes actually relatively quickly move off balance. Like they're only on open to his balance sheet from you know, 80 to 160 days. And so they can actually recycle their debt relatively quickly versus the world of fractional homeownership. If like I work with you as a company to get you a home, you're going to probably be in that home. And even if you're steadily building up your equity, you're going to be in there for maybe five, eight, ten years. So as a startup that capital that you just raised in debt is like just completely locked in. And so the level of debt that you need to be able to raise and the sophistication you have to sort of move that debt off, sell off these like REIT portfolios that you can eventually recycle that capital is a very different skill set that most, let's say fat startups don't have. You know, the, the only example that's recently started to feel this is, you know, a firm, you know, originally grew off of, you know, primarily, let's say sort of like small term loans. You know, most of their things were like a, you know, Casper, you know, for a nine month loan. But recently they've had a ton of growth with the growth of peloton. And there's peloton loans by default. Their term is like, you know, 36 months or something like that. So even they have started to have to figure out, okay, how do we figure out ways to recycle this capital that's currently, like, locked up in these peloton loans, but there's actually not a ton of startups that will lock up capital for such significant periods of time and then have to, like, sell off, especially in the world of real estate. And so that in particular, I think, makes it more necessary than even something like opendoor to have this understanding of, like, how do I take this portfolio and sell it off as a reit?

And is it accurate that you guys are more excited in lending than perhaps other VCs are? They don't fully appreciate?

Yeah, I mean, I'd say so. I think, you know, you're probably, you know, seeing this week between the purchases of like, you know, E trade, credit, karma, et cetera, that, like, the world of financial services, I think, is only still getting started. I mean, there's so many basic problems that, you know, you perceive, let's say, as a consumer where, like, right now it's still, like, ridiculous that, like, I have whatever, you know, X amount of dollars sitting in my checking account and I still have to, like, manually move that between different investment accounts. Think about how I want to balance this stuff. Like, there's a very easy and simple set of rules that I'm basically putting in my head that actually took me a while to even develop myself. But these aren't even, like, that complicated of rules. And hell, even, you know, I was talking to, you know, this is a very minute example, but, like, I was talking to, like, our 401k administrator founders fund. Like, we're a group of like, you know, investment professionals across the board. He said that I was, I think, the second person ever in the history of the company that had actually asked about how the funds were being allocated. And it's just like the. To me, in some ways, like, the most basic question of, like, the cost basis of having, like a S&P 500 thing that has like a 1.5%, like, cost basis versus 0.5% can actually be like, millions and millions of dollars. Of course, the 401k. Now, you could argue, like, most people are Founders Fund are hoping that, like, the 401k is what ends up, like, making the bank. But still, it's like, these things that are like, unless you're a somewhat sophisticated financial professional and really care about digging into every single little detail most people don't actually dig into. And so you see that as a consumer just imagine what there is in like the enterprise where there's so many different problems that aren't like being solved. I mean ramp is a perfect example of this where even just the act of, hey, I want to have a company that's, you know, me and Eric and I want to issue him a corporate card and I want him to be able to buy first class tickets on the, on the corporate card. And I also want to give him a $200 limit for dinners that's currently impossible in the current financial system. Like I can basically set like a $5,000 a month like credit limit, maybe some slightly finer tuned controls than that, but like other than that, basically impossible to put any sor programmatic logic into the approved slash decline of like a particular corporate card. I think this shows, you know, and I think this is a larger analogy towards the world of lending where it's just like there are still like these like massive like gaps in the world of lending. Where there's a company that I was recently looking at, there was like sort of first time personal loans for like recent immigrants to the United States. Turns out most personal lending companies, you know, so far included, even if they use a little bit of your college data, still rely on the FICO score. If you're a recent immigrant, you basically don't have a FICO score. But if you're somebody who just came from like iit, like the top school in India and like had like a, you know, great GPA and you're likely to be able to work at Google, you're probably a pretty safe person to lend to even if your FICO score is zero. And so there's still these massive information arbitrage is where a lot of the ways that we'll analyze lending companies are through two lenses. The first is what I'd call an underwriting advantage of basically why can you assess this particular person's risk better than anybody else? And then there's the distribution advantage. Most of the time I'd say the underwriting advantage is sometimes very obvious. In a firm's case it can be, I know that I can underwrite the peloton more easily than just a random personal loan because like the peloton actually has resale value. Or for this immigrant, I know that they went to IIT and they're going to be able to get a job At Google Distribution, advantage of firm is we're just going to work with these merchant partners for the immigrant lending thing. I'm just going to put up a bunch of SEO posts that talk about how do you get your first bank and your first loan when you move to America from India. Turns out very few people write on those Google queries and turns out that's a great way to get free and easy customers. Yeah.

And what's your net worth again? I'm just kidding. I'm just joking. Let's talk a minute or two on sleep. Let's say we were running a sleep fund. What would be your request for startups or things that, you know, entrepreneurs out there you think might be compelling versus things that you're like, hey, I just don't think this approach is going to work.

So I'll start off with like the, the broad one, which is actually this company that, you know, I just got pitched on this week, which is there's a ton of different sort of, whether it's habits, supplements, like almost like hardware that you can implement, you know, sounds you can listen to. There's a ton of different sort of, you know, sleep hygiene improvement strategies that have been developed over the years and some of which have like massively clinical studies that show effectiveness. But the problem is for each individual person, you're sort of an end of one problem where like for you the right answer might be, hey, blue light blocking glasses plus a sleep mask at night, plus having like some light noise in the morning to wake you up, versus for me it might be, you know, my personal thing is like GABA supplements is one of the things that more recently like had a huge effect on me. And I think there needs to be like a overlying like almost what I call just like, you know, whether it's AI or just human in the loop kind of coaching app that basically walks you through, hey, here are the various experiments you should run. So for like one full week, we're going to have you take GABA supplements right before bed use. Whether it's an Oura ring night sleep or some sort of sleep tracker, basically give you feedback on did the GABA supplements work for you, yes or no. And then basically over the course of like a year or two years, there's actually 100 plus experiments you can run and we can eventually determine like the right correct answer for specifically Eric Tornberg, which is like, hey, for you, you want this supplement, you want to go to bed at this time. Like there are so many things that people don't Experiment with like there are some people who actually are naturally have better sleep if they go to bed after midnight. And so you should probably figure out how to like figure out how to structure your life and find a job that allows you to get into work at like 10am versus there are some people that are the reverse that you should absolutely be going to 9pm People don't as rigorously experiment with this stuff partially because I think it's tough to do on your own. And so somebody building some sort of coaching layer that makes it sort of easier to structure and easier to understand whether or not it's like working for you. So that to me is like maybe like one of the broad ideas that we sort of had. And this is what this person like pitched me on as well. But within each particular niche there's still a ton that needs to be done. Like there's a ton of you know, supplements that I still think are explored. You know, Atomic next door to us over in the Presidio recently announced their sort of like sleep supplements company but still a ton that I think needs to be developed there. 8. Sleep is on the side of like the hardware where I think environmental controls are still in like their nascency. I'm really glad that they basically started off with like thermoregulation which is one of the key components to better sleep. But one of the other components of environmental regulation that has been pretty well studied is actually lower oxygen content. You might notice that when you're at higher altitudes you actually end up sleeping better. It's partially because your brain has slightly lower activity because you end up being slightly oxygen deprived. You could imagine doing that in an enclosed environment. Again there's some dangers of like somebody hacks into your bed and ends up like basically suffocating you at night. But there are clearly like some pretty low hanging fruit still. Whether again it's atmospheric, you know, pressure, the actual regulation of the atmosphere, how much oxygen is in it versus nitrogen versus you know, you could put in some neurotropics. There's definitely been some people that have shown that if you have particular smells that you associate with going to sleep that eventually those things will start to become somewhat psychosomatic and help you get into sleep. You could imagine doing humidity as well. You know, I'm somebody who whenever I'm in super dry environments I react quite poorly to it. End up like coughing a lot. Controlling the humidity is another example. So there's some example of like let's say hardware controls around your environment that I hope Eight Sleep ideally tackles all these, but maybe these get bundled out into different companies. And then there's probably the third set which is, you know, there's some early research. Matt Walker, the founder of, the author of why We Sleep, has a company actually around this that I'm not sure when they'll actually get to commercial traction or if they ever will. And there's some other companies that are trying to tackle this. But there's some early signals that are early papers that show the ability to actually sort of like induce deep sleep waves via basically wearing a cap with a couple of different electrodes to induce them even before you're actually starting to go to bed. So the idea would be basically, you know, wear a cap on your head for like 15 minutes before you go to bed, brush your teeth, get ready, et cetera, take it off and you should be able to actually skip the whole light sleep stage and go straight into like deep sleep. And so I think there's a whole set of, you know, the supplements and things like that are a little bit like the easier the environmental regulation is like the next step of difficulty. The third step is starting to get a little bit more into the world of neuroscience and actually understanding how sleep works and what's going on. But all three of those areas I'm very fascinated with.

I wonder if the coaching idea could also work for nutrition.

Yeah, Keith has sometimes talked about his sort of coaching idea that he's had for a long time. And so I think you can delve into any particular vertical that people care about, whether it's fitness, nutrition, sleep, you know, career dating. In the world of nutrition, there's a company that we invested in but they basically do like sort of like an at home blood test where it basically gives you the top 25 analytes in your blood. So it's everything from cortisol to testosterone, HGL levels. Basically the top 25 things that sort of like matter the most to your health. And this was one that was particularly fascinating to me because I thought I had a pretty good understanding of like sort of what was good for me in terms of food and you know, what made me feel good versus not. But I'd always had this problem for the past like three or four years where I just had like blood inflammation and like GI issues. Sorry if that's a little TMI where like my skin would get really hot and like itchy every like week or two, but I didn't really understand why and it would really screw with my sleep and like I'd Feel really off. But I never quite understood why. And I started taking this test pretty regular and I'd see like, okay, yeah, I can validate that. Like, yes, when I feel really itchy, my ESR levels are high. But then one day I had my like regular, you know, dinner from this place that's, you know, pretty close by to my house. And I did my normal at night blood prick. And I saw that my ESR levels had spiked and I was like, whoa, I don't feel hot and itchy yet. But this is saying my ESR levels had spiked. Woke up in the morning, lo and behold, I was like super itchy. So that was interesting. I wonder what caused that. And about a week later, I had dinner from the same place again. And then my ESR level spiked again. And I was like, oh, son of a bitch. This is what's been causing it. But the problem is there's always been this kind of like, you know, 16 to 24 to 30 hour delay between when I ate the meal to when the skin itching started to happen. And it turns out that's just like too far for like. I'd like to think I'm pretty sophisticated in terms of keeping track of what I'm doing to my body, but clearly not sophisticated enough. Like once every two to three weeks, realized it was like, turns out sesame oils in pad Thai, especially really oily pad thai, completely screw with my stomach. And this is a way of providing me a much tighter feedback loop. And so there are a couple different things that I end up realizing, like turmeric actually does the reverse for me where it really lowers my levels. Walnuts for some people are great for the HDL levels. Actually, for my HDL levels it would spike them. So I don't eat walnuts anymore. So there's all these things that are somewhat similar to like the sleep thing, where again, there's a verifiably correct answer for Eric and for Delian. But our answers might be completely different. Like, red wine might be great for you and red wine might be terrible for me. But the only way to really understand that is through type feedback loops. In the world of sleep, it's basically track your aura ring and do your sleep tracker and have somebody collect almost that data for you. In the world of nutrition, it's basically like, you know, blood analyzed to basically how your body's responding.

It's a transition we need to make from sort of universal advice to customized advice and software to help enable that.

Sleep fitness, you know, career dating, etc. I think like the big breakaways of the course the next decade are going to be taking, like whether it's like the comms of the world that are trying to do very generic advice and really making it sort of like n of one advice.

That's cool. So we've been talking about how you evaluate different segments from an investor perspective. We took consumer marketplaces, fintech, enterprise. I think it's a good segue to this concept of business equation. That's a core key concept. Why don't you talk about what that is, how to find it, and then maybe how it's customized for some of these different spaces.

Yeah. So this is the next essay in this series of essays that I've been writing for a little while. And this one might end up being a couple of different segments broken out. The first is one thing that I started to realize was Keith's like fundamental first prism for analyzing any business. Whether it was a marketplace, hardware, consumer, any business. It was always this thing where you would basically be focused on what I call like the nine month payback period, which is basically the business would outlay some equity and then eventually customers would pay back that equity dollars with some level of margin. And he was always really obsessed about getting it to like 9 month payback period. And I never could quite understand, I was like, why exactly nine months, like when not six, why not 12? Like what's wrong with that being that far above 12? And turns out I'll actually include like a little bit of an Excel model in this, in this essay. But it turns out it's just like basically prohibitively expensive to scale up your business unless the cash that you pour out the door actually ends up coming back to you relatively quickly. And so it's partially why I think you'll notice that I don't think any of Keith's businesses have had like crazy terrible like unit economic because they haven't been any of these like, you know, softbank blow ups, partially because he's always been pretty focused on making sure they have to be unit economic profitable if you're paying back in nine months. And then they also have all had relatively quick payback period since he basically refuses to get involved in a company where he doesn't think it's quick. So it's that first fundamental prism. And then the second is it turns out when you fix that constraint of payback period, you now can basically turn any type of business into a pretty fixed equation, whether it's a marketplace, a consumer, hardware, consumer social, into a series of things that feed into the payback period. So let's take you know, eight Sleep as an example, right? They basically have a customer acquisition cost. They have the hardware and their aov. They have the basically cost of goods that goes out the door and then you have the margin dollars after that. For someone like them, you know, ideally maybe they have a peloton subscription one day, but they basically need to like pay back all of the cac, ideally on day one, because you might not basically ever make money on a customer ever again. And so here when he talks about like discovering your business equation or really starting to influence it, it's more on what are the various levers that we can like pull on and twist for different parts of this equation. So it's not just like here's the equation of like x plus Y equals Z in terms of margin dollars. It's also what moves X, what moves Y, what moves Z. And it turns out across all consumer businesses, basically the same things that move cac, that move cogs and it move like the margin dollars, where it starts to get a little bit more complex are, you know, that's maybe like an easier one to understand. Let's take something like Fair, which was, you know, around that we recently did, that was like valued at a billion dollars. That company is sort of like a wholesale marketplace between, you know, local goods makers and like local goods retailers. And marketplace businesses can be sometimes complicated to understand because you sort of have two sided customer acquisition costs, you have two sided margins trying to understand like how they pay back. But one of the levers that is most important in terms of marketplace growth tends to be the referrals from each side of the market. And so the thing that actually makes Fair grow more so than anything else that they actually almost like didn't discover until maybe a year, a year and a half into the company, is when they bring on board a maker onto the platform, those people will actually end up bringing their retailers that they currently have pre existing relationships with. And so one of the things that the company ended up discovering was this was a very important flywheel for them to get right. And the only reason that these people are willing to bring on pre existing relationships onto the platform, which like would make no sense. Like if you already have this relationship, why would you bring it on digital? It turns out they have this like financial services component that makes it very attractive for people to shift this relationship onto the platform. Where now as a maker I can be like, hey, before you'd have to pay me immediately. Now Fair will actually sort of loan the delta between the two of us where, yeah, I get paid immediately and you don't actually have to pay until my goods actually like sell in your store. And so with all these businesses, I think the thing that Keith tends to help out the most with is whether it's a consumer good, whether it's a marketplace, whether it's like Enterprise SaaS, there's a fixed almost equation that works. And the types of levers are actually like very similar. Right. So with like fair, he was constantly pushing them on, like, figure out how to like discover this flywheel and figure out how to push this because this will make your business grow basically faster than anything else that you can do. Like you can get really good at acquiring makers, you can get really good at acquiring retailers, but nothing will compare basically to this flywheel. And so the post will hopefully articulate a variety of different sort of like types of businesses. And then what are the various actually common levers across every business that is within this type? And what are the experiments that one can run in order to see whether or not that particular lever works in your business? And I think part of what I got, why I got motivated to write this was I started to realize that Keith gives the same advice to all the marketplace companies and he gives the same advice to all the consumer companies. Even though when you apply that advice to your particular company, the way that it ends up like coming out is somewhat different, but the advice is overall the exact same. And it all comes from this like high level, nine month payback period.

How does he differentiate in terms of the payback period focus? What are other investors focusing on or what do they tell their companies to do that's different.

Yeah, it's a great question. You know, some people will just be focused on basically, you know, high level growth plus, you know, some level of positive contribution margin or even sometimes even negative contribution margin with the hope that it eventually goes positive. And so, you know, some of the latest, let's say, you know, hiccups in like the startup world, like the weworks of the world, I think have shown the constraints of that approach. And so at the end of the day, people are obviously analyzing some level of financial metrics. The question has been how much they sort of focus on not just the margin, but also how does the margin pay back the upfront cost? Like I think some people have been thinking, okay, even if the time to pay back is like three or four years, I'll just keep raising enough money so that like eventually the money will flow back to Me. And so even if I don't have money in my coffers, I'll just raise more in order to keep growing the business.

Is that what doordashes?

You know, Keith definitely knows more about like the numbers there, but they're free cash flow positive on like, you know, many of their, like their core markets. And so, you know, I can't necessarily speak to their exact like payback periods, but their economics have looked attractive for every fundraising deck that I've seen since, you know, and I've only seen series C and above.

I'm trying to think of negative contribution business that is, that is a good business or that you might be, you know, is Uber Lyft in that category? Or like what are.

It's a fair point. I think you, there are times where you should be willing to take on negative contribution margin businesses when there's a very clear and strong like you know, network effect that will eventually allow you to get deposited and not allow other people to enter the market and erase that margin. And so that's where I get worried about some things that look a little bit closer, like the scooters of the world where there's not as clear of like local network effects. There's definitely some like hardware innovations that those companies might do that might really help and like fix those economics. But even if like Bird ends up making a really great scooter or if China ends up making a really good scooter and selling it to Bird, everybody else will buy the same one and it'll all just lower their prices and they'll all end up like erasing their margin anyways. And so it's a very, I've almost like never seen him make an exception for the negative contribution margin. Like he has more of an allergy towards that than I think almost anybody else. I think a lot of other investors will be willing to accept, hey, you're starting out at this negative margin and eventually you'll march it up. He will only ever do it if it's like slightly negative. But there's been a clear trend line that very, very soon it's going to like flip to positive and that very soon after that it'll flip to the nine month payback period.

And he didn't do any ride sharing stuff. Right. Because there's a question of how big the network effect is there.

He was like an early, I believe like angel investor in like Lyft, but different than his sort of like venture capital career where especially these like operational intensive businesses, he's made sure to Be pretty economically prudent. I think even from the early days, including with doordash and I mean obviously Opendoor as well has, you know, difficult, you know, margins as well.

Totally. Let's talk about executives. So on the interviewing executives, in terms of what you look for in executives, why don't you, you have this great piece on it. Why don't you unpack some of the differences in terms of what are you looking for when you hire a CFO vs COO vs CMO vs some of these other exact positions.

Yeah. So the first prism or like lens that I like to have founders think through when they're thinking about a role is basically is this role going to be like value creating or value protect? And that might be different for different types of businesses. So let's say for example, a CFO at a something like Google or like an enterprise SaaS, that person's job is not to like innovate. They're not trying to do anything crazy financially. Their whole job is just like, make sure the books look good, make sure that like, you know, we're not paying the salespeople too much, the commission structure makes sense. Like everything is to be as like conservative as possible. You're not trying to do any financial innovation whatsoever. Versus let's take like a CFO at Opendoor. Again it's a super low margin business but you're gonna have to do true financial innovation there. Like you need to be able to understand capital markets, how to raise more debt, how to like balance that with the equity capital that you're raising. Like that is gonna have to be a value creating role. Like you're innovating there. And so I think there are types of roles that typically are value creating versus typically are value protecting. But it's not a like universal rule. You need to like basically analyze your business and say is this an area of the world that like I needed to differentiate against? Right. So like let's say like my home construction company, they really need to differentiate in their like mechanical engineering and their software engineering on like the financial side of things. With marketing, with architecture there they probably want to play conservative. There's like no need for them to take the risk there. Like that's not where they're innovating. Most of their innovation comes around these other things. And if all that other innovation works, they ideally just want to be as conservative as possible like with these other things. So once you have this prism in place, then you start to go almost two completely different in like parallel interview tracks. Let's Start off with the easier one, which is like the value protecting interview track that one. You literally just want somebody who's done the exact same job before. So you know, you're trying to hire your CFO for your like enterprise SaaS business. Just go find the dude that was the VP of Finance or, you know, man or woman that was the VP of Finance at the prior Interesting Enterprise SaaS company. If you're trying to hire, you know, general counsel for, you know, your, you know, construction company, find the general counsel from Lennar or something like that and try and poach them in. Right? You want to look for somebody that's literally worked in the exact same industry, has worked on these exact same problems and there's basically like no downside or there's no risk of them screwing it up because again there's. You're explicitly saying I don't want any upside in this role because I'm not expecting them to innovate. And so all you're trying to do is mitigate downside. On the flip side, if it's a value creating role, basically all the rules are the exact opposite. You want somebody who definitely has not done this before. Like if you're trying to hire the CEO for DoorDash, you're probably not going to be able to get the CEO from Lyft because the person is going to say, hey, I've already done this job before, why would I do this exact same job again? You want somebody who's ambitious, risk taking, has potential upside and for sure there's going to be potential downside as well. In some ways in the world of like the value protecting, you want truly zero defect hiring. Like if you screw up there, that is a massive, massive miss. If you screw up on the value creating, that's great. If you're actually not screwing up on the value creating side, it means you're not taking enough risk on these types of roles where you're being too conservative and that means you're missing out on like potential upside. And so sometimes that means looking like, you know, when you hire a VP of product, you might actually take somebody who's just like an engineering manager but has been like fiddling around with product on the side and you're like, you know, I think this is potentially out of your scope, but there's some chance that you could potentially be doing this. And so the types of questions you also ask these value creating people tend to be around what I'd call sort of like, you know, ownership mentality and willingness to sort of like push the ball forward where. You know, my favorite question for somebody that's like in a value creating role, which I kind of brought up earlier with that CFO example, is, you know, what would you have done differently at like your last company than what the CEO chose to do or if you were CEO, how would you have done things differently? People that are ambitious, risk taking, want to eventually own a large piece of a large pie someday have extensive thoughts about this. Like, if you ask me what would I have done differently if I was the CEO of Teespring when I was there, I have like a whole, like I can go to a whole hour long spiel about like what I would have done differently versus people that have kind of a meek or quick answer that's kind of like I would have hired slightly different people. It's like if you're not being kept up at night by this problem, you're just like not the right person for this role. Like, it's not as if I prepared my answer for this interview or anything like that. It's because this has just been gnawing at me because I believe in being such an owner and want to really shoot for the moon that I want to, I want this company to succeed. So those are, those are like maybe like the high level things. The next area that I like to dive into, which is somewhat related to this like ownership mentality is like, how good of a strategic thinker are they? Like, somebody that you're interviewing for, especially an executive level position, really needs to be able to actually like understand your business equation. And so there are ways to assess this. You can sort of have them walk you through, hey, how did customer acquisition and what was the funnel like at your prior company to see if they could actually strategically describe your, the prior one, or just spend a ton of time with them and then see if they're starting to be able to identify the business equation for the company that you're currently in and see if you ask them, hey, if I had to like, you know, move my payback period to be from 10 months to nine months, what do you think some of the ideas would be? And ideally you should hear a litany of ideas across the various different variables they can move. You should ideally hear something that's around cac, something that's around margin, something that's around cogs, something that's about like repeat customer rate. Because if they truly understand the business, they should understand there's a ton of different factors that go into, go into basically like that payback period. And then the final thing is how does this person basically fit into your particular company? And so I like sometimes to have founders basically list out, here are strengths, here are weaknesses, both in terms of like, personalities, traits and like management styles, but then also like true, like domain expertise. Right. And so how does this person fit in? You ideally want somebody that has a diverse background, different way of communicating, different way of like, managing people, such that when a problem arises that needs a particular type of management style, you're most likely to have something as opposed to having a very sort of like monolithic, you know, culture, especially at the executive team. And so, you know, I mean, I think one of the people that has done like the best talks on this is actually Claire at Stripe. She gave this talk at the KV Summit a little while ago where she actually like went through sort of this like personality color wheel that all the executives at Stripe have done and showed how basically literally every person at Stripe is almost as diametrically opposed as possible in the various, like, personality traits. And you also, you know, as part of being executive, they need to be a phenomenal hirer. And so the final question I'd like to go with is basically, you know, if I were to hire you today, who would join you tomorrow? They should almost certainly have at minimum three, four or five names. The people that have loved working for them have learned a ton. Right? Think thinking about me with Keith, right? This is the perfect example of, you know, he went over to Founders Fund. I mean, it was just, it was a no brainer. I like lightly debated it in my head, but I was like, in some ways I've learned more from learning from him and through osmosis that like, I have to go wherever he goes. Obviously, like, if he asked me to join along, I'm going to join along. Ideally, you want a whole crew of people that feel that way to this person because they're such a great teacher, manager, coach that the moment they come over to your company, all these people are going to want to join as well.

So people could have this checklist. But I'm curious still, like, you've interviewed many, many CFOs in your three years of assessing their answers. What do you think you've learned or better understood that a junior investor who has this checklist but hasn't done it at scale might not fully appreciate or be on the lookout for?

I think probably the biggest thing that's changed has been my understanding of the diverse sets of backgrounds and skill sets. And that can be necessary for your CFO and What the ideal background and skill set looks like for different companies. So I think comes back to this example that I was mentioning that's like the CFO at the enterprise SaaS company versus the CFO at an open door or a doordash have to look wildly, wildly different. If you're dealing with basically like infinite margin. Your basically job as a CFO is like how many snacks can I afford to make sure that everybody is like happy? And how do I make sure that people are being paid enough compensation such that like we have great employee retention because it's a pain in the ass to recruit versus on the flip side, this person needs to basically like manage really tight P. Ls they need to have been able to understand debt. And so now I feel like I can. You know, the most important way to help as a, let's say as a venture capitalist or as a board member, help a company assess a CFO is understand their like underlying business, how it works. And then what would the ideal CFO look like and what would their background look like for this company? And so is this a company where the CFO is a value creator or is it a value protector? Value protector. Find people that have basically had that same background value creator. Okay, let's start pushing this person on their thinking. Do they know about like the, you know, latest up to date capital markets deals? Do they know the, you know, craziest things you can do to sort of like, you know, shave a couple dollars here and there with like, you know, payment providers or something like that? That's what I'd say I'd like learn the most. And the types of questions you ask are obviously very different between I think those two cases.

When you talk to your founders as they're scaling, you know about to build exec teams or coaching their executives, what's the biggest mistakes that you see them making or common mistakes that you and your pieces help address?

The two things are time allocation and then making the tough choices. The time allocation is around how infrequently founders appreciate how much time it's going to take to recruit somebody. There are times where if you want a really great coo, especially if you have a particular candidate in mind that you think is the perfect fit, you might have to spend like a year, two years basically recruiting her and like grabbing coffee with her, hanging out with her, getting to know her, making sure that she's excited about your business and the moment that she's starting to even like ponder thinking about her next thing you're of course the first call that she's going to be making. And so you need to be investing in these, like, longer term relationships alongside some of the like, okay, maybe you can't hire a coo, so let's get in a VP of finance, a VP of operations. Make that underneath while you're waiting to like bring her on board. And so most of the founders that I work with, it's literally just constant hammering of like, I know that you think your job as CEO is to go and actually do things, but the moment that you close your series A or your series B, your job is no longer to ever do things. Your job is literally to find people who are really good at doing things and convincing them to come join you. So I'd say that's part one and then the part two is basically just make making the tough decisions where I'd say most of the time, I know in my heart of hearts, like when a founder is like hired a bad VP of growth within like the first like month and a half and I'll kind of lightly communicate it to a founder, but they always, almost always end up coming around to it like on their own anyways. But it's unfortunately always at like month six, month seven, month eight. And so, you know, getting people to sort of be willing to cut the losses a lot earlier than they're willing to. Those two mistakes are always the most difficult. And I think part of it is it's always just like not seeing it on the other side with both, with both of these things with, you know, the time allocation. Once they do put in the time, it's always, it's funny how it's always the exact same thing. They're like, oh my God, I'm so glad I put in all this effort. This is amazing. But it's like this delayed benefit thing where it's a lot easier to just do a little bit of the operations yourself and try and solve the problems as opposed to going out and spending time to hire the coo. And then same thing here. You're always like, maybe this person will get a little bit better, maybe something will change. Maybe if I give them a little more feedback, somehow this will fix versus when they fire them, they're like, oh my God, we're actually functioning better even with the exact same team, just without this person. And so again, delayed gratification can sometimes.

Be a tough one just to push on that for a sec. Most people make the mistake of firing way too late, but for the ones who didn't fire and then the Company employee turned around or situation got better. What do those people do? For the people who are, it's early where they're not sure they could fire, but they end up turning up the situation. Again, that's rare. But for the ones who do do it, what are they doing?

Well, I think the only times I've seen that happen and again, you know, limited career so far have been in roles where it is not the top one, two or three metrics that need to be moved today. It's something that they were already, they were sort of when they hired this person, were investing in the future. And so maybe they have a little bit more space or time to like coach this person up. But I think it's rare where if this is truly the top priority of the company and this person is not performing, then be able to turn around on a dime in like a quarter to be able to like fix things. I've basically never seen the only times where you see like the Pips or the feedback or things like that work have been like, okay, we're gonna like get this person executive coach. They're gonna have like three to six months to actually like turn things around. And it's because we can afford the like time to allow this person to turn things around because maybe the thing that they're not working on is more on a, you know, year or year and a half long timeframe than like needs to be solved in this quarter. But yeah, very rarely happens. Yeah.

My guest today has been Delian Asparohov. If you want to learn more about what we talked about, definitely dive into The Essays Delian IO and follow him on Twitter @ze Bulgar. B U L G A R Delian, it's been a pleasure. And if you're an entrepreneur, I highly recommend working with Delian.

Thanks Eric. Thanks so much.

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