Gokul Rajaram | Lessons from Zuck, Jack Dorsey, Sergey Brin + Defining your ICP and Market

The great thing about Zuck is he knows how to switch between founder mode and manager mode. He would delegate, but when a crisis hit, he would be extremely hands-on until he felt the crisis was passed. So as soon as Google+ hit, he called what is called lockdown. Back then, there was a sign outside his office that said lockdown. It would be off.

That's awesome.

Lockdown was on. And so you knew that lockdown was on. And that means that he called an all-hands of every single engineer at the company. And he said that you've got to drop what you're doing. And he would basically personally run the roadmap for the company. I want teams built and I want these 8 or 9 things shipped. That was a forcing function and it was really energizing. I do think when the company is in an existential crisis, that's when the founder needs to just step down. You can't delegate at that point. You've got to be very, very close to the work and almost dictate, micromanage what happens.

Welcome to The Peel. I'm your host, Turner Novak, founder of Banana Capital. Today's guest is Gokul Rajaram, who has helped build 7 generational companies including Google, Facebook, DoorDash, and Square. And we'll start by dissecting the one common theme across them all.

The culture of the company and the things the company focused on were unique to them and the right thing for the market they played in, or, or the product.

Learning about the magic moment from Sergey Brin.

Removing friction in the magic moment is a lesson that I stuck with me.

How Gokul is so responsive despite advising early-stage founders and serving on multiple public company boards.

The iteration speed is just so much faster that you don't have time to wait till the next board meeting.

How Jack Dorsey was always selling Square.

And he would always go up to the merchant. He always would carry around some Squares and he would try to get them to use it.

Okay. The biggest mistakes when defining your ideal customer profile.

They make it too general. Too broad. The ICP needs to be as narrow as possible.

Before we talk to Gokul, I publish new episodes every week exploring the world's greatest startup stories. Subscribe and check the link in the show notes to make sure you never miss an episode. Gokul, how's it going? Welcome to the show.

Turner, thanks for having me. It's great to be here.

Yeah, I'm excited because we've been— we've talked about this for a while. We finally got it on the books. You have helped scale, it says on your website, 7 generational companies. That's a lot. Are there, are there any common threads you've seen just between all those businesses, the founders, the products that you've kind of one big common thing or maybe multiple that just leads to a generational company?

It's a very good question. I've been lucky to observe these companies when they were fairly young, especially Google, you know, 4 years, 5 years after being started. I joined Facebook 5 or 6 years after being started. And then the others also. I think one of the common themes I saw across all of them, I have seen across all of them, is the fact that the culture of the company and the things the company focuses on were the things that were unique to them and were, were the things that were the right thing for the market they played in or, or the product they built. For example, at Google, Google was a technologically focused company. In other words, what mattered at Google was building the best technology products. And that mattered because Google, ultimately, the products that Google competed with, the markets they competed in, technology was what it took to win. Unfortunately, they were not able to win when technology was not the driver. For example, Google Plus, it wasn't about technology, it was about something else. They were not able to win. Similarly, DoorDash is a very operational-focused company. They have a lot of product innovation, but it is infused with operational and really deep understanding of details. And that's what it takes to do well in the food delivery space, for example, delivery space. Facebook was a very growth-oriented company. Everything was about— and metrics-oriented company. And, and, and that was what it really took, because you can't just throw technology and expect to do well because it's a true consumer experience. So you've got to be fixated on subtle things that move the numbers, that move retention numbers, that move MEU numbers, et cetera. Square was a very design-centric company because a big part of the value prop was how do you make the product frictionless so that SMBs can sign up with zero CAC and this experience is better than for a consumer product. So each company, each founder emphasized things that were different than the other. I always say that if you put any of those founders in charge of the other companies, they wouldn't be the same and they wouldn't probably win. So the founders and the culture and the values all tied together, almost what they call it, steel in a steel thread versus a steel man-like thing where there was a steel thread passing through all of them that was the right thing for that company and that market.

So it's, you could maybe call it not founder-market fit, but also founder-culture, founder-competitive advantage fit, or, you know, you're just leveraging what your strengths are and really leaning into what you are uniquely good at.

Well put.

Interesting. Okay, and so I was going to ask you if there's anything that made them unique, anything in particular of like certain founders or companies.

There are many parts to greatness, right? That's the thing you realize, that the thing that was common to all of them was the uniqueness and the fit, like you said, the founder-market fit. Again, I think the founder was the right fit for that market. They were just the right fit because they cared about that problem. They were deep in the problem and their specific set of skills, like Liam Neeson said in Taken, their particular set of talents were a perfect fit for that market.

They're like Liam Nelson of social networking or SMB payments.

Delivery of payments. Exactly. That gives them a competitive advantage, gives them a competitive advantage from day one.

So I know this is kind of going back a long time. You— I've kind of heard the story a little bit. You've never actually told me, but I've heard on other podcasts. Getting your very first job in tech in Silicon Valley? How did that come about?

It was a company called Onetta, which is an optical networking company funded by Sequoia and Matrix, if I remember correctly. And it came out because I was a business school student on the East Coast, and I— it was in 2000, 2001, where it was in the aftermath of the NASDAQ implosion. But turns out that when all the dot-com companies died, there was one sector that was growing, which was telco. If you remember, you might not, you were too young then, but yeah, I was, I was in 5th grade. Yeah, exactly. But there was a mini telco boom in the 5th grade because there was a bunch of regulations that loosened and these things called CLECs, competitive, competitive carriers, basically came up to challenge the monopoly of back then the large carriers. And so because of these new, new customers and new technologies like optical networking, In fact, we know Khosla had some of his biggest wins during that time, Serend and some others, which was sold for billions of dollars. But there was an optical networking boom. And so that was the one space there were jobs for product managers, and I really wanted to be a product manager. So instead of, I said, instead of applying to the consulting or banking firms, somehow got to an alum of the business school whose wife, actually alum whose husband had started this optical networking company and got to them and convinced them to offer me a job. And, you know, that was the only job I got. And so took the plane out to the Valley and have stayed ever since. So whatever it takes, I think I knew I needed to get out of East Coast and be where technology was created, I felt. Yeah.

And then I know one of the companies you're at was Google and you— it's one of those stories where I've heard you kind of say it on podcasts before, but you were, you kind of built one of the initial ad products. How did that kind of come about? I know there's kind of an interesting story on how that evolved and how you got involved with it.

The biggest lesson for me from that story is the power of serendipity and being open to opportunities. So every day I started Google, I was working on a product called syndication of search. So basically search is already syndicated to other websites like AOL, Yahoo. I think AOL was our biggest partner. We— there was a smaller partners like Ask.com, etc. We provide them with search and also provide them with search ads.

That was a pretty big part of Google's business at that point in time, right?

Exactly. Web search syndication, ad syndication, search ad syndication. And then every day at around 6 PM, people would go home, but there'd be still enough people working. So I just wander around the office and I just came across in a room, a few engineers who were working on stuff. And I was like, what are you working on? Turns out they were working on a product, a project almost at that point. Which Sergey Brin, the co-founder, had asked them to, which is just like Google, the search engine, when you give it a query, it finds out the best pages that match that query. They were taking the opposite. They were taking the index, search index, and flipping it, which is given a page, how do we find the best topics or keywords for that page? And then using— we already had ads from AdWords. How do we use AdWords ads to show ads there? So they were running a bunch of pilots. They were just starting, trying to get a few publishers, web publishers, and seeing if the contextual— contextually focused ads, because those ads are contextual based on the content of the page— would perform better. So they were very early on, they were trying to build this engine, run ads, and they wanted more help. They wanted product help because they were all engineers. And I offered to help them on the product side, and they said sure, they wanted help. And they said, aren't you working on this other thing? I said, that's okay, I can also do this thing in addition. And that's basically what I did. I did 2 jobs for a while, for a few months. And then I did, I was in presentations doing the presos with them. And so the exec team—

they probably thought you were on the team.

I was on Team X, but you know, there was enough things going on at Google that, you know, that's a great thing about being at a growing company, that there's always opportunities and it's up to you to be proactive. And after a few months, my boss saw that it was, you know, this was taking up more of my time. It was also growing fast. And so put me on this full-time and I was very happy to just work on that full-time. And that became a product called Google AdSense, which was a large part of Google at that point.

Was that their external website? Like if I wanted to monetize my product?

Exactly. So if you have a blog, back then blogs were huge. And so if you have a blog, you want to make some money, and you basically sign up for AdSense, put a piece of JavaScript on your website. And as soon as that page loads, you start, you know, and someone clicks on the ad, you start making money. And I think we had It was like a small or actually back then fairly large, millions of monthly active blogs using it. I think it got to $100 million in gross revenue in a couple of months, a billion in gross revenue in a year, year and a half. So it was exceptionally fast going. It was global from day one because it was just a pretty remarkable product. I still get where people who used to run blogs, I still periodically will get inbound saying, 'You helped me pay for my kids' education,' or 'Helped me pay for my house,' etc., with AdSense. So it's a great feeling. We help people make a living doing that.

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Exactly. I think it was actually right around the AdSense product launch, which was where publisher could sign up. They would get a piece of JavaScript code and they would place it on their site and then they would show ads. However, when we initially were building the product, we we were worried about publishers of all kinds of publishers signing up and getting access to this code and then showing Google Ads on a not-safe-for-work site or a site that promoted violence, all kinds of stuff. We didn't know what we didn't know. We said, well, we should put the publisher in approval queue once they apply, and only when they get approved will they get this JavaScript put on their website. So we built this approval queue. We were like, who would object?

It seems like a good idea.

Yeah. Seems like a great idea. Of course, who wouldn't want their—

who—

Google was a growing brand then. Who wouldn't want Google brand to be associated with the publisher? We didn't want to. So we built all this. In fact, a huge amount of work went into it because ops was involved. We had a small ops team. They were getting ready because that was, you know, they were hiring people for that. And it was like 2, 3 engineers.

They were staffing up to approve all the things.

They were staffing up. I mean, classic, you know, fashion. They were staffing up. And so one day Sergey, he would drop into the launch meetings and we were drumbeat towards launch in, I think, 6 or 8 weeks. And he said, what is the approval queue? Because we had already checkmarked that and moved on. He looked at the screen. I was like, well, the approval queue is something publishers have to be put in a queue. We approve them. Why? Well, what do you mean why? We were kind of— we didn't even know how to answer that. Why? Because publishers could pose a reputational risk to Google. He was like, why? Why? We were like, well, if a publisher with bad content runs, he's like, I don't really care. I think they should be allowed to run. We were like, hang on, do you think they should be allowed to run any publisher? He was like, yeah, because he anyway pointed out this interesting thing that we had overlooked. He's like, you're not, you're not understanding that publishers can just change. They can apply with a different website. One of the biggest challenges we faced was validating that someone owned the website because you or I could apply with nytimes.com and there's no way to know that you owned. And even today, I don't know how to actually prove. There's some complex ways that you can prove it, but back then it was super hard and, uh, to prove that you owned a certain domain or something like that. So you could apply with that. And then people also had subdomains because people would host it on sub-subdomain of blogger.com, and, and so that was super hard to prove. So that's what he said. So the reality is whatever you're doing has lots of holes in it anyway. And he also pointed out that Google and AdWords, you could actually run an ad against any keyword you wanted with any website you wanted. So for 100 or 1,000 impressions before they started charging you, before they started doing approvals. So he suggested the same thing that, hey, why don't you just let the ad run for 1,000 impressions And at that point trigger an approval or some kind of check. And it can be automated in many cases because you can see what pages they run on instead of, instead of basically focusing on the site they apply with. So you know really that they own the site because they got the JavaScript onto the page. And second, you know the exact pages they run on, because that's the other thing. There were many sites that were mostly good but had pages that were bad, uh, because maybe it was a news article. There was a crazy one around the news article about a serial killer. And so I think it was a great news— it was a good— I think it was a top news publication, but one page had that content. We didn't want to show ads against it, and we were able to turn it off because of that. So we were too coarse-grained and we were not thoughtful enough. So I think overall we took it off. And I think the key lesson though for me was the magic moment lesson, where most products have a magic moment. And the magic moment for AdSense was publishers seeing that they made money. And that was his primary objection. It was not the holes, it was the fact that you are impeding publishers from— they're signing up for AdSense because they want to make money, and you're saying, now wait for a week before you make money. You cannot have hurdles or barriers in making money.

Yeah, because they might churn and they go try a different product.

Exactly, they try a different product, they won't ever respond, you lose them, you have them then. So you need to— so I think that, that removing friction in the magic moment is a lesson that has stuck with me. And so I love products that you can go end to end and sign up and instantly get to the magic moment of the product, whatever it is. And I think sometimes you can have the wrong sense of magic. Where at Caviar, which is a product I ran, a premium food delivery service, we thought our magic moment was for people seeing photos, beautiful photos of food, which is what we had. And so we would basically not gate people from seeing the photos. In other words, you could just download the Caviar app and start browsing the browsing the photos and you'd only have to have an account at the end. But some enterprising engineer saw this, or some marketing person, I forgot who it was. They put a login block or sign-up block before seeing the photos. So basically, you— I was super upset. I was like, hang on, why are you doing that? But turns out they were right. Or they, you know, because our magic word is not seeing the photos, it was getting an error-free delivery. And that didn't depend on photos. So, so the login before seeing the photos didn't do anything. It was really when someone didn't get a delivery, that was what really lowered retention. And that was a magic moment. The first delivery error-free from a great restaurant.

Interesting. Okay. I could see that. I mean, I think the first time I used, we have GoPuff in Ann Arbor. It's one of the, it's probably like the original 15-minute delivery company. The, like, the dark store model, the one that got super popular throughout COVID. So we've had this in Ann Arbor for a while, and the first time I used it, I mean, I, I don't remember what we got. We got like a bottle of wine or like some chocolate for date night, and it came like 12 minutes, and I was like, oh my God, this is insane, because I'd used like DoorDash and Uber Eats, you know, it takes maybe half an hour, or the restaurant you want is an hour away or whatever. But when it shows up that quickly, I was like This is game changing. Like you can order anything you want and get it instantly. I mean, from right there I was sold. Like we order from GoPuff all the time cuz it's just kind of the local quick fast, like it's like the fast version of Amazon. It's like Amazon, but you get it in 15 minutes. It's incredible. So one other thing I, I, I know you were kind of, you were at, you're at Google, but then you worked at Meta, formerly Facebook. You like talked to Zuck a lot, worked with Zuck a lot. There's the moment when Google+ launched. I remember when I was in, I think I was a freshman in college, or it was between my senior year of high school and freshman year of college. It launched, all my friends were like, oh, Google+, this is gonna beat Facebook. Like, this is so cool. We, we used it. I, I don't think it ended up having any killer features. That's, I think, why we stopped using it. It was just a clone of Facebook basically. I think it had video calling, but I'm curious, what was it like inside of Facebook? I know that was like a pivotal, completely pivot the company, let's make sure we survive this. What happened inside Facebook when Google+ launched?

I think the great thing about Zuck is he, he knows how to switch between founder mode and manager mode very well. And even then you could see that he would delegate things very well, but when a crisis hit, he would go into founder mode, which is he would be extremely hands-on until he felt the crisis was passed. So as soon as Google+ hit, or maybe even before it hit, as the rumors started spreading, he called what is called lockdown. So that is his version of founder mode. And he did that, I think, a few, few times in the company's first several years. Whenever there was a crisis facing the company, an existential crisis, or what he perceived as an existential crisis, he would put the company into lockdown. And basically there would be a sign back then, there was a sign outside his office that said lockdown. It would be off. That's interesting. Lockdown was on. And so you knew that lockdown was on, and that means he called an all-hands of every single engineer at the company, and he said that you've got to drop what you're doing, and here's the set of— he would basically personally run the roadmap for the company at that time, which is a few hundred, maybe a few thousand, maybe 1,000+ engineers for sure. So he would basically say, I want teams built, and I want these 8 or 9 things shipped. I forget what they were, but they were very specific to counter the perception, you know, that Google, Google+ had. And so he said, And then of course the impact, right? He was also not just— he was very smart because it was not just impact, but it has to be used by X number of people. So he said, once we get to those things and ship them and get certain amount of usage, that's when you go to lockdown. So he also established exit criteria for the lockdown. And so it was not just a 2-week thing, it was not a 4-week, it was once all these things are done and there's usage. And basically we've staved off— so that, that was a forcing function, and it was really energizing. And I think we were on the ads team, so our job, you know, was not as, you know, it was because ads still needed to keep running for the company to make money. So there was some part, but many of the ads front-end engineers, we didn't build any new features, so that was more the ads infrastructure that was kept running. Many of the ads engineers also were pulled into the consumer side to build basically consumer features. And then I ended up PMing one of the consumer features. I forgot which one. So even the PMs were pulled into other stuff. But that's— I think, I do think that— I think when the company is in an existential crisis, I think that's for sure when the founder needs to just step down. You can't delegate at that point. You've got to be very, very close to the work and almost dictate, micromanage what happens.

So it sounds like you don't remember any of the features. Like, do you remember, was there anything that countered Google+? I'm trying to remember.

I think, I think Google+ Google+ ultimately fell due to its own weight versus anything we did, to be honest. I think it was because they just tried to copy Facebook within the context of Google. I think it was the pale imitation. I think when you try to copy something versus build something that goes to your strengths, I think you end up not doing well. I think Google was not something people associate with social, first of all. Even the brand name was probably just like Facebook and Instagram, right? Facebook The smartest thing to do is buy Instagram. If I were Google, I would have just bought Instagram or something like that instead of trying to build Google+.

Was Google+ before Instagram? Yeah, really? I didn't know that.

Of course. Yeah.

Wow, man. At least they got YouTube though. That was a good acquisition.

Yep, exactly. I think that is a great example, right? Google tried to do video, didn't work, and there was this fast-growing private company called YouTube at that point. And kudos to the leadership for shutting down video even though there's a lot of people on it. It was sunk cost, didn't matter. Quite YouTube, did all the warts that if you remember back in the day, YouTube had lawsuits, just burning a lot of money, and still we had to pay $1.69 billion, which is a big part of Google's market cap back then, did doing all that. And we were all thinking, what is Larry thinking? I hope he knows what he's doing. Obviously he had made a lot of great bets, all successful. And this was again, I mean, that's founder mode. I think when you— I think buying a company like that, going in directly, it was a version of what Zuck did a few years later. Going and buying Instagram and then going into WhatsApp. I think in many cases an acquisition, when it's such a— when it's a culture that, that goes to actually what I was saying, Google is a technologically focused company. Google does really well when technology matters. YouTube was not a technology feedback then. Yes, there is technology, is, but ultimately it's an environment, it's a culture, it's a vibe, it's a different kind of company. I don't think you can build that within, within, within a company. And in fact, acquisition in many cases is the best way to do it when the fundamental what it takes to win is different than what your core DNA is as a company.

Yeah, I think you can maybe, maybe in a recent parallel with that was the reason that TikTok was successful and got as big as it is because it was its own unique kind of culture of the product. It was different than YouTube. It was different from Instagram. Obviously copied the features. It probably kneecapped the growth a little bit, but it didn't die because it was kind of its own product. Its own DNA.

TikTok had nothing to do with identity as much. I mean, there was no notion of identity. You can post any video, sometimes with yourself, sometimes other stuff. It's just pure video. And then you're right, there was some copying and some, you know, some kind of— but yeah, it's still growing and doing well.

So, and I have a listener question from Hari Raghavan. He said, you are on the board of a couple public companies. I think Coinbase and Pinterest, maybe it's changed, maybe those are the two, maybe there's more.

The Trade Desk is the third one. Yeah.

And then you're also helping founders starting their companies. What is kind of the difference? There's like, maybe it's founder mode versus manager mode. It's like public board member mode versus startup helper mode. Like, how do you switch between those two? And why do you think you can do it successfully?

To be honest, I feel both of those modes complement each other for me, because the things you learn from a scaled company, some of those things can be brought to the startup. And then some of the things that you learned from the startup around nimbleness, agility, new ways of doing things, and you brought to a scale company. They're quite similar. The key difference, I think, is that at the early stage of a startup, the founder has nobody. They don't have an executive team. You truly have to be— it's much closer to founder mode when you're helping because you're trying to be more prescriptive in those cases. Why? Because a founder doesn't have a team. You can't say, okay, here's 6 things, go and discuss with the team and come back. There is no team. In many cases, the founder, a few engineers, if they are. So literally you are brainstorming and by the end of the meeting you have a course, a plan of action that you agree on, and the founder goes and executes. I'm sure you see this yourself. At a public company, as a board member, it's not your job to prescribe. Far from it, because this is a leadership team. They are pretty senior executives. They've scaled this company. Your job is to be almost Socratic.

The philosopher.

Exactly. And ask questions, ask the right questions, and make sure they're thinking about those questions. Have we considered this? Earlier, I joined my first board in 2008, 16 years ago, and back then I would conflate the two modes where I would very much try to prescribe things. And I realized that over time that it was not my job as a board member to prescribe, but my job was to make sure the company was looking around the corners and asking the right questions to make sure looking around the corners. And now, of course, if you ask the same question 3 times and they're not— they don't have good answers, then you start becoming more prescriptive. Hey, can we do this again? It's not like I want you to do this. Can we please at the next board meeting discuss pricing or discuss competition, whatever the case may be? But first you start with, hey, have you looked at this? Have you considered this? And you see what they have to say. So that's how you do it versus, hey, let's discuss pricing in the next half an hour. Let's discuss pricing. Let's discuss how to hire this person. You've got to just execute. I think there's no time to discuss. And also the timeframes around a startup are just— the iteration speed is just so much faster that you don't have time to wait till the next board meeting, for example, to think about that. But at public company scale, obviously you've got to operate fast, But if you operate too fast, you have a multi-thousand person company, you can't yo-yo them up and down. So you've got to be very thoughtful and intentional about what you do.

Interesting. I've definitely had it before with founders where we're like talking about something, like I'll be hanging out in their office and then 2 days later they send the investor update and they like launch the thing we talked about. I was like, whoa, nice. That's, that's like, that's a good, that's good. That's like a key KPI for a startup is just like how fast you move, how fast you get things out there. And so you not only worked at a bunch of companies, you're a board member, you also invest in companies sometimes. How did you first get started with angel investing and kind of making the jump to making that transition?

It's a great question. I think even today it's the same thing. It's supporting people. And in this case, it was actually— it started by investing in Google colleagues back then in 2007 who were leaving Google. I think 2006, 2007 was when the first wave of Google people started leaving to start companies. People like David Friedberg, who's now in All In, he left to start the climate company, which became actually the Climate Corp. It was called Weather Bill back then. So a bunch of people left to start companies, and I was lucky enough to invest in a few of them. It was just a support. And I realized that that's the best way. You invest to learn, and you invest to support as an angel. As a professional VC, obviously now you have obligations. And then you also, you know, turns out if you do it well, you invest in good people, to support them, and you invest in spaces that you're not too much of an expert in but you want to know about, you think it's interesting, you do well financially. But it's, it's not the primary goal. Obviously, as a venture capitalist, you kind of have to make money.

You don't last very long. Actually, you could maybe last kind of long if you don't make money, but there's a point eventually where the fund 3 is what you hear, right?

Turn a fund 3 or fund 4 is when the LPs truly want to start seeing—

yeah, they want to see some of those good markups. I don't think you need any big exits yet by Fund 3. It depends how long it's been, but you're probably like 4 to 6 years in at Fund 3, maybe if you're, if you're, if you're lucky. But on average, I don't think you get those big exits quite yet.

Yeah, for seed stage. Yeah, for sure.

Well, and so talking about seed stage, I know we were talking a little bit before we started recording how much seed has changed from when you first started to today. They're almost completely different. Like, what are— what was it like back when you were first kind of did your first few angel investments? And then over time, how has it changed?

2007 was— there were just a small number of firms. Everyone, everyone basically, they were angels. So you always went through an angel round, and then the firms would come in. So you had a time to do friends and family round. Then there were a bunch of angels that became super angels. Jeff Clavier was an early super angel, a few others. And then the firms would come in. So they were— everyone had their clear lanes. No one kind of impeded in their lanes. It was all somewhat collegial. It was a collegial industry. But I think, you know, 2014 was, I think, the first time, I think, where you started seeing seed funds come up. You know, Homebrew was one of the early ones. First Round was actually— First Round was one of the, probably the earliest alongside Jeff Clavier. I think there were 2 or 3, but there were not that many. Again, they, you know, they wrote early checks. But then seed explosion happened in 2013, 2014, I think, when they were— A4 was created around that time. I your farmer shop, homebrew, et cetera. Again, still the large firms and the seed firms, generally there was a clear demarcation where the seed firms would do the first check and they would then graduate from there and the large firms would do the next check. I think in 2018 to 2020, a sea change happened when the large firms started going downmarket. I think at this point, I don't think any firm, any large firm where they're sold, there's a single one that has not done inception or seed deals. Many of them have their own seed programs. They call them different names, but they are seed programs, and they offer very, very good terms, sometimes better than what the pure seed firm can offer, because these are parts of multi-stage firms. So it's not the only thing they— this is almost in many cases a way to—

it's a deal flow to get the Series A where they're going to put, you know, they want to put 50 times more capital into the company.

Exactly. And or even to Series B sometimes. Exactly. So It's a way to dip your toe. And so I think that makes it extremely challenging, I think, for both the entrepreneur to choose, okay, if you get a $5 million on 50 or $10 million on 50 as his first check from a large firm, or you're getting, which might come with its own pros and cons, or you're getting a $2 million on a 20 from a seed firm. You know, what are the pros and cons of that? Obviously, the check size is 5x more, but it comes with a different set of things. So I think that, and then it makes it hard for the seed firms and it makes it hard for the large firms because now the large firms, the reality is large firms now have hundreds of companies, some of them, and some of them have retreated, but they're still doing it because they want to know about these great companies earlier and earlier. And the best way to know it is to be on the cap table, even in a small way. And so I think that it's definitely a Cambrian explosion in some ways of of choice for the entrepreneur, but it makes it confusing and hard for LPs on the one side and for the investors themselves. Everyone is a little bit confused. I think everyone's trying to figure out, especially with AI companies. I mean, look, I'm sure you've seen it, right? AI sales and marketing space in particular, and AI legal. I mean, there's a market. I mean, I can't list a number of AI sales and marketing companies that are out there. There's probably more than 100 good companies, good companies, good teams. And doing well. These are all companies that are doing a few hundred K to a few billion in revenue.

Yeah. And then it's like, who— what is the, the form factor or the team that specifically breaks out? Or is there going to be 100 of them that all break out and do hundreds of millions in revenue or billions in revenue? I certainly get a lot of emails from those, those AI email companies that are helping people. Not as excited about that part of it being on the receiving end. But well, So it's speaking of that about like busy inboxes, a lot going on. Everyone I talked to when just kind of asking what we should talk about in this episode, I think Kurt Lin at Pinwheel specifically, he was like, you have this, you are extremely responsive. You have, you're on the boards of public companies, you know, you're invested in and advising a bunch of founders all the time. You're super busy. How are you so responsive? I think like even with me, when we're like DMing or emailing, you respond faster than I do. And I'm pretty sure you have more going on than I do. So what is your system? For just being so responsive. And actually, maybe a way to lead into it is, why is responsiveness so important?

I think it's because things change so fast. I've seen that if you don't act on something, A, I think by the time you act on it, it's too late. And then the other side basically is like, okay, it doesn't matter anymore. So I've seen that being responsive, being fast at helping, or even just replying to an email can make a difference. I think just things move too fast. So the second thing is responsible is to get it out of your own brain. I think if you don't respond, if something is kind of— it helps the recipient hopefully, but it also helps you. For me, it's both because for me, I have almost like an OCD about clutter in my inbox or things that are in my mind. And if I respond to something and basically it's almost like I get the monkey off my back. So there's a famous article called Get the Monkey Off Your Back, HBR article. It's a 1960s article or '70s article. I recently posted about this a couple of months ago. Beautiful article. It's about why it uses a bunch of '60s language as subordinates and so on, which I don't like. But outside of that, it still holds true where it's really about within a company, but it's about how you, when someone gives you something and someone says, hey, can you help me with something? You just help them To then move forward with it versus saying, okay, I'm chewing on it. And then you ask them the next time, how are you working on it? They said, I thought I told you that I need help with it. So they put the monkey on your back. So the goal is never to have— I want to have as few monkeys as I'm carrying, as I need to carry. So I feel like by responding and always the response is, what do you think? Even the response can be, here's what I think. What do you think? You're basically putting the action on them to think more. And so I think it gets the monkey off my back. Anyone can only carry a small number of monkeys. And I feel every email in my inbox, if anyone responds to me, is a monkey that I have to carry. And I need to lighten the load of the monkeys. And the easiest thing I do, it's pretty simple. It's a principle called Getting Things Done. I did a seminar on it at Google like 22 years ago, 21 years ago. It's always stuck with me. I think there's a lot of systems, but the thing there is about email. When you go to an email, it's a one-touch principle. What it means is when you open You open the email, you do one of three things. Whether if the response time, if it takes you less than 5 minutes to process and respond to it, do it right then. Second, if it's not yours, if it's a response is to delegate, you just forward it to someone and ask them to take care of it. Or third, if it takes more than 30 minutes. So most things are bimodal. It takes less than 5 minutes or more than 30 minutes. You have a separate task list where you put this in the task list. And then you basically come back on a regular— the task list is what you need to really work on an ongoing basis. Create a presentation, do a memo, you know, think about pricing strategy, whatever the case is. But then your email is clear and it's either responded to, delegated, or it's on your task list that you have to do. And then you use calendaring with yourself, schedule time to do each of those tasks. So you estimate how long it takes and you basically break it up into pieces and use calendar with yourself.

Oh, so you literally make calendar events and you say, I'm working on this thing for 45 minutes. This is how long I think it's going to take. I'm going to get it done.

Yeah. Instantly it frees up my mind because I no longer am thinking, oh my gosh, when do I find time? Guess what? I found time with myself to do it. It again takes a monkey off my back to find the time to do it. And you find the time with calendar.

All right. So I found the article, HBR article, Management Time, Who's Got the Monkey, and then Getting Things Done by David Allen.

Yes, GTD. Exactly.

Okay, so I'll throw links to both of those in the show notes if people want to dig into a little bit more. You gave a pretty good pitch for them. I'm going to read them after this. You also have another kind of topic I know you like talking about, like founders should always be selling. What does that mean?

I think it means that almost always the first few customers have been acquired by the founder through hand-to-hand sales. Jack Dorsey can still recite to you the first few customers that he got for Square. Tony Stanley and Andy can still tell you the first few customers they got for DoorDash, etc., especially in B2B business or one side of the— one side. Even for B2C, I bet Zuck can tell you who the first 10 users on Facebook were, and Larry and Sergey can tell you who the first 20 users on Google were. But I think as the company grows, sometimes founders lose touch with that specific thing, which is focus on the customer. And I think it's important to go out into the field on a regular basis to engage with customers and figure out both convince customers to use the product. That's why I saw that whenever Jack was in the cafe, he would always— in fact, he would use excuses when I was doing interviewing with Square. We would always meet in a Square cafe and he would always go up to the merchant and ask them, or any kind of cafe, why are you using Square? Why are you not using Square? Can we kind of convince? He always would carry around some Squares and he would try to get them to use it.

Okay.

And it's kind of amazing to me that at that scale, The founder is still doing that. Also, I think selling is important because you're always selling to recruits. So I think founders, many founders still, still hundreds of people would try to close recruits as well as selling to investors. I think so. I think selling is a skill that across all your constituents, whether it's investors and employees or recruits or customers, you need to keep doing and you can't lose touch with it. You can't delegate it because you're going to be—

So you'd rather selling your product you're selling a paycheck or equity to an employee, or you're selling equity to an investor. So it's just always, you're always trying to sell.

You're ultimately selling a vision to all three of them, a vision for how your business is going to be better using them, how your life is going to be better, how your returns are going to be better for investors. So you're selling, and selling is, as you know, all about storytelling as much as anything else. So you've got to ultimately, storytelling is probably the single most important skill that you need. How to weave the story that compels the person on the other side to take an action based on the story or narrative you're telling.

Interesting. So when, when you talk about Jack Dorsey, he's in the weeds, he's always talking to customers. How, if I'm a founder, how should I think about drilling down on my ICP? I guess it can be different, different stages of the company.

The most important thing about ICP is ideal customer profile, and I think the most, the biggest mistake that founders make is they make it too general, too broad. The ICP needs to be as narrow as possible.

But don't you want a bigger TAM?

You want a bigger TAM, but the reality is it will get bigger. But I believe if you look at Facebook, the ICP was purely Harvard students, like whatever, 5,000 of them. That's it. If you can't succeed in that, then there's no reason for you to go outside of Harvard. So I think ICP narrow, ICP focus you to just win that fully. And then, because if you think about ICP, simply a business, say, assume you're selling to business, it could be a business that is less than $100,000 in revenue that has its physical storefront that is in the Mission District of San Francisco. That's it. And then you remove— those are 6, 7 qualifiers right there. Then you win that segment. Then you remove one of the qualifiers that are in the Mission District and replace it that are in San Francisco. You win that, then you remove that, then you go to the Bay Area. You remove that or whatever it is, you remove the— So I think you slowly remove qualifiers and you slowly get bigger and bigger in concentric circles. But I think I've seen time and again, the biggest mistake founders make is to have too broad an ICP thinking exactly the TAM, TAM, TAM. But this TAM thing is all useless. It's all theoretical. The actual thing is the ideal narrow, narrow, narrow customer. And I think the right framing is your ICP should be a segment where if you sell to 100 customers of the ICP, your value prop or offer, 90% of them should say yes. If it's only 10% or 90% of them, that's a problem they face. That's a problem they face. And then you're obviously selling problem, not solution. And then you're like, okay, that's my solution. But that problem is 90%. If it's only 10%, that's not an ICP. That's too broad. So I think you need a narrow enough thing that almost everyone you speak to in an ICP should resonate with that. Should— as I keep, I keep pushing founders to narrow their ICP. Narrow it. It's okay. You can go broad later. Narrow, narrow, narrow.

That's— I would not have expected 90%. I mean, that's like just super, super narrow.

It forces you to then really narrow, and then, okay, you can go to 60 if you take one. But if you then— then let's go and check with this 90% if it's true or not. Because as I say, it's very important to have, then you can dominate. I think— I believe also the Peter Thiel axiom. I don't know if it's true, or— I mean, I think he said it, it's in his book, where it's much better to win a blue ocean niche market and nail it first, and then you go from there where you're not competitive in some ways. The fact that 90% are facing the problem is no one is solving the problem for this 90%. Almost the whole segment is untapped.

So then if I'm thinking about how do I size my market, obviously I probably am not doing like a top-down analysis. Like, how would you advise?

It has to be bottoms up. It has to be segmented out by these attributes. and then you try to understand how many people are, how many customers in each of these segments, and then what's the willingness to pay in this segment, and then you multiply it. It has to be bottoms up. I think in fact one of the best TAM sections is Blink Capital has a TAM, how to, how to size a market because it turns out if you have any, any, any population more than 10,000, there's always going to be segments. You can't tell me they're a uniform market or maybe, you know, a few thousand. So you've got to, I want to see segments. I want to see how you're segmenting them and I wanna see which of those seg— how you characterize, could be by large, medium, small, like enterprise, could buy the SMB mid-market, could buy something else. But then you like look at each segment, size it bottoms up. What's the willingness to pay? What's how intense is the problem based on your pricing model? And then you try to understand what it is, but it has to be bottoms up. I don't like top-down segment at all. I think they don't serve anyone because it's not actionable. Bottoms up tells you what your assumptions are. Okay, there's this many mid-market customers, each of them has this many employees, you know, each of them is doing this, so therefore You know, this is the size, etc.

I think I found it's called How to Size a Market in 30 Minutes.

Correct. That's it. Yeah, it takes— doesn't take too long.

Yeah, I guess. Yeah, 30 minutes. That's pretty quick. We can throw it in. We'll throw that link in the show notes as well. You have a couple more. How to Hire a Leader for a Function, Titles at a Startup, which I think is a fun topic. The Contrarian Opinions.

People have strong opinions. Ben Horowitz, I think, and even Mark Andreessen, they both believe that titles— and I had a pod the other day with Sriram— they believe very strongly that titles, you should actually give titles because they're an easy way to compensate people. But I think especially director and VP titles early on, I think can set the wrong tone for the rest of the company and can really make it painful for you to run the company. And I've had enough people now reach out that they basically retreated back from titles after seeing how painful it was once they gave one of those titles to one person. Because they felt they had to give it to them to get them to join the company. Everyone at the company then like, okay, now director titles are fair game. So what does it take for me to become a director? And that's what they focus on, becoming a director, becoming a VP.

So like, if I'm a director, I'm— you're quite more, you're quite older than me. And then you come in and you're like, you know, you're a manager, you're going to be like, Turner, why is Turner a director? Like, I should probably be higher than him, let alone at the same level.

Exactly.

Well, this has been a lot of fun. Thanks for coming on. This is a fun conversation. We had to, we had to be really tight with time, but hopefully people enjoyed it.

Turner, thank you. This was amazing. Your style is just so awesome. And thanks to listeners. And I'm excited to hope that it's helpful to folks.

Yeah, I think so. I actually took a lot away from this in such a short time. So this is fun.

Thanks, Turner.

And thank you for listening. Make sure to check out the show notes if you want to go deeper on some of the topics mentioned throughout the conversation. If you like this episode, it would mean the world if you liked, subscribed, commented, followed, and shared it with a friend who can learn from it. And if you don't wanna miss future episodes, subscribe to my newsletter, The Split, in the show notes, and you'll get links plus a transcript for every new episode emailed directly to your inbox. Thanks again for listening. See you in the next episode. Hey everyone, Eric here. At Turpentine, we're building the first media outlet for tech people by tech people. We're the network behind the show you're listening to right now. We have a slate of hit shows across a range of topics and industries, from our AI and investing cluster of podcasts to shows that drive the conversation in tech with the most interesting thinkers, founders, investors, and influencers like Econ 102 with Noah Smith. We're launching new shows every week and we're looking for industry-leading sponsors. If you think that might be you and your company, email me at erik@turpentine.co. That's E-R-I-K at turpentine.co and let's partner together.