How Billion Dollar Tech Companies Operate (w/ Gokul Rajaram)

Every goal should have a check metric along with it which puts guardrails on that goal and make sure it doesn't go off the rails.

What is up you sexy bastards? It is your boy Fishing Rod AKA Rabba Can't Lose AKA no Kagan. That's me. In today's episode I talk to my buddy and really impressive guy Gokul Rajaram.

This guy is impressive.

Now he has worked on the executive team of some of the biggest tech companies in the world. Google, Facebook, Square and now he is currently Caviar lead at DoorDash. At one point he also started his own company, Chai Labs which got acquired by Facebook. I came across Gokul on Twitter. You can check him out at Gokulr. That's G O K U L R. He also has insane articles on Medium.

About how to run a company.

There's specifically one called a Weekly CEO Email. Now I have copied that for Appsumo and I have found it super amazing.

And I think the team really loves it. If you've ever want to learn about.

How the biggest tech companies operate or.

How to join them, you're going to love this episode.

In this conversation you'll take away three gigantic things. Number one the different leadership styles of Larry Page, Zuckerberg and Dorsey. Two strategies to help companies operate better. 3. How to transform a product company into a platform company. Enjoy those three things plus a bunch.

More air nuggets along the way.

Before we dive in the show, check out AppSumo.com, the best deals on software for you to start or grow an online business. If you're unemployed or you're just starting out or you want to have your own side hustle, go grab some tools and start an agency or freelancer business reselling and using those tools with customers. That's what a lot of people are doing now. You can go to appsumo.com Noah and join the newsletter. And even if you don't buy, you can see what are the latest greatest tools at insane prices. That's appsuma.com Noah. Also special pre show shout out to listener bonus 44 it's a boner. They left a review saying a must listen for anyone trying to get better. If you're an entrepreneur, a business decision maker or just curious person, Noah's podcast is a must listen to. Just educate yourself on a ton of topics. Damn I love you and I love.

Every other one of you gorgeous listeners out there. You're so good looking and if you.

Want to shout out in a future episode, leave a Review wherever you're listening to this podcast, even write it on a flyer on a billboard.

I will check it out. I check every single one of them. What does a crazy day look like?

Tons of meetings. Perpetually 10 or 15 minutes to every meeting. And then personal stuff intrudes, which is much more important in some ways than other stuff. You got to take care of it. And then at the end, you look back and say, wow, you basically lose control of your day. Basically when you have a planned out schedule, you're going to accomplish xyz, but then curve balls are thrown.

How do you want to look back on it all, like your life?

I want to be the kind of person where enough people say that I made an impact on their lives and I helped them in some way, shape or form. So ultimately trying to touch as many people as possible explicitly through various ways. So, yeah, how do you think. Answer that question. I'm always curious how people.

How do I want to look back?

Yeah, I don't know.

I think that that makes me work less when I think about that question, because I think, you know, I got sick. When did I say I was not. Not Covid, but I was sick of something. And I remember thinking when I was sick, how little I care about how much crypto I owned or, like how much money our company made or how much real estate it was. Like, I just care about being okay. But it's funny with looking back on our lives, like, we. It's not the money, but we. It's not the work, but we spend so much time in this space. It's a good reminder saying health greater.

Than family, greater than work is what I think where if you're not healthy, you can't really help your family or maybe a burden on them. And if you don't have your family, which could include family, is not just biological, but just who you consider to be close. Family, then work, etc. What meaning does it have? Why are you working if not to kind of, you know, enjoy time and provide for your family and be there for them.

It's interesting, though, because it's like we. If we work backwards from the ending, like, how does that tie to how we live today?

You try to be intentional, right? You basically try to set goals around. Ideally, if you're lucky, you don't have others set your goals. I mean, you'd be like Noah Kagan, and you basically set your goals yourself. Not all of us are lucky to basically run our own media empire and business empire. We all, some of us even work But I think everyone has agency to at least part of their lives they can own. And even within work, you can, you know, carve out. You can figure out the kinds of things you enjoy doing, and you can have impact and that align with your own goals and have agency there. But you do try to work backwards from where you want to be. That's what you said, right? I think they say the days are long and the years are short, and so you can kind of have days go by. It takes, oh, my God, long day. But then you look back, and years just, you know, especially the last two years, think about it, just passed by in a blur. Even though every day seemed interminable. And now I look back, oh, my God, it's already two and a half years since COVID first appeared in our lives.

What I do that helps me with it is on Mondays, I always write out what I want to do in the week. I just write out what I'm looking forward to not do. I don't care what do. It's like, what am I actually looking forward to? And then every month, I do a review. I've been doing it probably about eight years. I just review the month. I just. I look at my photos, I look at my calendar.

I.

And I just say, like, how'd it go? And what I want to do next month? But it's also like, I was. I was looking about how I was thinking. So I read a review from a year ago, and I was like, huh? Yeah, it's interesting to see how we've evolved or de. Evolved, gotten worse. But it's. I find that to be helpful practice. Hold on. You said something earlier, man. Like, you have, you know, you've done well financially, what it seems externally, and.

You have agency to do whatever you want.

Does it not feel like that? That would be my guess. Is it maybe my assumption.

I know I have agency, but I also feel responsibility. I mean, I. Thankfully, I'm in a role at a company where my number one goal is to figure out how to help our customers, how to help the company. And I have incredible agency. But I'm. I'm like, that advice might not apply to. It's. You can't really give that advice to broad swaths of the population, you know, almost anyone, you know, because most people are in a certain job. And so you and I are lucky that we are in roles and at companies and running things where we have a lot of agency. But that may not apply to everyone.

Do you think people can get rich having jobs? I feel like that's a misnomer that I think people discredit or discount.

I think they can, I think to be honest, I think at a good company, at a fast growing company over a period of time, people who are early at Microsoft and stayed there for 10 years in the 80s, they did extremely well. Same with people who were at Google early and just stayed on. Because once you stay on and the company becomes bigger and bigger over time and you grow in the company, your compensation and it compounds over time. Hopefully you have some equity, it compounds, you get more equity grants, etc. Your compensation goes up and yeah, I think you absolutely can. You got to work in the right kind of company, I think where, which is growing, where you're growing within it. So those two factors need to be true. The company needs to be growing and your role within it needs to be. Needs to be growing. If either of them is not true, that doesn't apply as much.

How did you pick such great companies? Because you, you're like, you're banging them, man. Like Google, Facebook, you know, Square door, Dash. I'm just going to copy what you do.

You know Steve Kerr, right? The warriors coach?

Yeah.

Someone called Steve Kerr the Forrest Gump of the NBA because he's been a participant and an observer. Well, he was an active participant in the Bulls dynasty, was there from 93 to 98, then the spurs dynasty. I think he joined it. Right. You know, 98, 99 time frame and was there and now the warriors dynasty. Obviously he's the coach, but he's not like the Steph Curry or the Tim Dunker or the Michael Jordan. He's been an important supporting player in all three of them. Obviously as a coach he's much more. I was thinking, actually that's a great analogy. Like the forest Gump of the Internet. In some ways I've had important, not critical, good, important, solid roles. And I've been very close to observing, you know, some of the greatest companies that we've had in our generation. Whether it's, I mean especially Alphabet, Facebook, Square, hopefully Doordash, they joined that ranks. But and I think the other analogy is that I actually didn't do anything. I almost got pulled into these companies by accident, all four of them. I didn't actively apply to join any of them at Google. I was going to join Cisco, actually. I had an offer from Cisco in 2002, but the Cisco offer got. They basically froze the offer because in 2001, 2002, there was a hiding fees in Telco, so I was out of job. And turns out this, this young company Google was hiring. And a friend of mine said, you know, you got to apply to Google. It's like, I don't know. Then he forcibly sent my resume to a recruiter he knew there. And that's how I got pulled into the process. I didn't even send my own resume. And at Facebook, similarly, I had started a company after Google. And then Sheryl Sandberg, I had known her at Google, and she was basically like, google, you need to come and join us and lead the ads team. And I was like, I don't know, I don't know. And then almost pushed me and forced me to come join Facebook. And I was so happy she did afterwards. But again, I. It was not my own. I. I'm raising my hand to join that. And same with Square, where they reached out because I had advised a company that Jen was acquired by Square. And when they asked CEO of this company that was. That had joined Square, who's the best product person, you know, or some of the best product people? You mentioned my name. So they reached out and again, I was like, I don't want to go to San Francisco because I live in the South Bay. I want to commute this and that. All excuses. Despite myself, I was like, okay. You know, they were like, no, you got to come out, meet Jack once. And then I met him once and twice and so on. And then doordash the same way. It was almost, you know, happy at Caviar, running Caviar within Square. And then ultimately Square decided to spin out Caviar, and we were looking for an acquirer, and DoorDash was our acquirer and great choice. And then all the key conditions of the deal was that I have to join along with the company. And so I ended up joining. So it's almost. I had no agency there. So it's kind of crazy. I mean, I think about it and it's almost like you. I didn't actually choose any of the company. That was literally the process. All four times was initiated by someone else versus me.

So the lesson is, let the universe take care of you.

I think you pay it forward and you help people and as long as you do good things without asking. I think, for example, I had built good relationship with many execs at DoorDash, including our CEO Tony, even while I was at KPR. And so they knew me. And I think that is part of the reason they were excited about Caviar, that they felt that we had built a good team. And that is A good reason. And the same with Cheryl. She had seen me operate at Google and she had good opinion about me and so she pulled me in. And the same with this person at Square. So all of them, I think it goes to say that if you do an excellent job and you also broaden, you have a broad enough network within a good company, then those people, when they go to take on the next roles, they'll pull you into, in with them to their new companies.

How do you be excellent at these companies?

It depends on what your role is. I think you've got to very clearly understand what your responsibilities and what you need to own. And ideally you need to be associated with a clear outcome or a clear project or a product that you're delivering which has some kind of business or financial outcome that impacts the company outcome. I've seen that sometimes when you join a very large project, it is hard to make an impact because there's too many, too many cooks in the kitchen. And so for me it's always been for most part actually been around joining smaller things that are still young or nascent and then growing them. For some reason, I've always been attracted to smaller things that grow within larger companies and gravitate towards those. And I think there's fewer cooks in the kitchen, you get a little bit more space to operate and experiment and sometimes failure unfairly you get associated with the success or sometimes failure of the the project. But you can take risks and be more innovative.

As the Steve Kerr or Forrest Gump of tech. What did you observe? You said Steve Kerr observed these people. What have you observed with Facebook and Google and DoorDash and Square? You've been around elite leadership.

I think one of the most interesting observations I've had is that there is no one path to greatness. If you look at Larry Page who was the CEO and kind of Ian Sergey, Mark Zuckerberg, Jack Dorsey and Tony Hsu, Now DoorDash, all four of them are fundamentally different personalities. Fundamentally different personalities and the lead companies in very, very different ways. Larry, very focused on deep tech and the power of technology. At Google, I believe, at least back then the philosophy was as long as you built an incredibly technical, incredible technical product, technical rank product, whether it's Gmail with one gig or whatever the case may be, you're. They build it and they will come. Mark Zuckerberg, on the other hand, is very, very, I would say his mindset is almost. He's the premier growth hacker of our time. I think he sets a goal and outcome and then you work backwards from it. So while I was there the biggest goal was how do we get to 1 billion monthly active uniques. And so everything worked backwards from how does it help us get get to 1 billion monthly activities. And he's amazing at thinking of products in that context. Jack is one of the premier design minds of a generation where he's basically able to simplify and distill product design to its absolute bare elegance. And you can even see it in the way Square offices are designed. But incredible design, incredibly designed, well designed products and power and the belief in the power of design. And then Tony I would say is the closest person to Jeff Bezos I know. Running an incredibly complex operational business, deep in the details of the numbers and really focus on inputs and what levers we should move but yet coupling that with vision. Very, very different personalities but key commentary amongst all of them was the company they were in and the company they were running. They shaped the company almost I think in, in that image and what was needed to be successful in that space was what their, what they had. The reason Google couldn't succeed in social is that social was nothing about technology. Google's key strength was technical excellence. That didn't really matter. Facebook was initially, what is the initial Facebook query? It was a huge PHP script that Mark wrote. You know basically when a college student can write a, you know, write a piece of code it's nothing to do with technical excellence. It's about thinking about goals and growth goals and virality and working backwards from there. Similarly I think when Square came one of the biggest challenges was the point of sales systems was super hard to use. Square built a self serve point of sales system. You can just download the app from the app store and get going. And again product design was critical to that success. And the same with DoorDash. DoorDash, you know is I think the reason it is right now doing well in delivery is because really focused on detailed input metrics and really take it one, you know, 0.01% at a time and just focus on execution versus anything else. And very aligned with the founders personalities and so on and even the culture of the company. So authentic to yourself is something I realized is really important. Larry couldn't have behave like Mark Zuckerberg or vice versa. So founder, company, market fit in some ways that's something I've learned the importance.

Of because I think I'm self conscious Gokul where like I'm like I'm not going to be a great CEO and I'm not as Smart as Mark or like Jack is like.

And.

But what I heard you say, which I really appreciated, is just like, you're not going to be him, but you're Noah and you're Gokul and whoever's listening, the, you know, be the CEO in your own way.

Exactly. You got to be authentic. Employees also stiff out if you try to be inauthentic because when they say about setting values of the company, the values of each of these companies are very different from each other because values are expressing behaviors. And if you kind of say that these are the values, but then you or your execs behave in a different way. Employees are pretty smart and you basically promote people who are kind of contrary to those values. It's going to be quickly. So exactly now what you said, each of us needs to be the best CEO we can be. And there's no one path to greatness. There are many paths, infinite parts of greatness.

And what is your day like? Is it a lot of. Is it context switching? I mean, we're hanging out and got a chat with you, but is it like all doordash?

I try to be intentional about my day. So I try to plan my day well and try to see, you know, sometimes meetings have been already put in there. So I'll try to just not go to meetings where I think I can't add value or I don't feel I'm needed in the meeting the evening before, I try to opt out of meetings. So because I try to get at least one or two hours of time in the day to do deep work, which is either I always have one or two memos to write or things to think about which you can't really do with half an hour blocks. You need at least one or two hour blocks. So really try to make sure I get one or two hours in the day and then try to have a mix of internal meetings. My role at doordash, I see a lot of. I meet with a lot of companies in our ecosystem, but at the same time also meet with a lot of internal partners and stakeholders. So balance between those two. Make sure that you're kind of meeting with internal folks who are also external folks and having time for deep work.

What other thing? You know, I copied your CEO email, which is now to we do a tap sooner every other week and people love it. I love sending it. It's fun. I work with this woman Anna on it and it's really enjoyable, which is just like an update, I guess. What other things have you observed and I can't wait for your book to come out. I don't know when it's coming out maybe, but I think you have these really interesting and great on your site as well as on Twitter, operating principles that are unique and I just feel very like that was good. I'm just going to copy what Gokul does, I think.

Thank you for saying that. The CEO email is an interesting one and I think it's so easy and it's also enjoyable. You also feel like you were talking about how at the beginning of every month or you look back and I think it's also interesting to look back. It allows you on a weekly basis to look back at the week and look ahead at the week ahead and then communicate to the company what you learned in the last week and what you're excited about for the next week and the company. You know, you'd be surprised at how many companies, how many people, even at small companies crave the understanding of what our leader is thinking about what's on their mind, what do they care about? Because if you're able to articulate that, then it aligns people so well. If you're able to articulate here's the top three things I'm thinking of, top of mind for me, here's what I'm excited about, here's what I'm worried about. Being a little vulnerable. People really appreciate it. So I think in the same vein, doing all hands I think is something with zoom. Obviously the vibe of an all hands has changed in remote companies, but just getting people together and then companies are small, it can be very informal. Of course when you're 100 plus people you need to be a little bit more formal and make sure you're not wasting people's time and have some agenda and have people actually talking about specific things and having representation across different groups of the company. But the all hands on a weekly, biweekly or fortnightly I should say, etc. Basis is a very, very powerful thing. The other thing I think is the power of sending the weekly each team. So in general, every company has initiatives, right? Initiatives are cross functional things, cross functional projects, big projects in the company level that the CEO cares about or people care about. Whether it's engineering, product marketing, sales, operations, all working on these projects. It could be all kinds of not just product focused thing could be people things. I think a best practice is just once a week, ideally at the end of the week or the beginning of the week, send an update on the project at Facebook. It will be called PPP and DoorDash is called Weather Reports. And different companies have different names, but a very simple template. Here's our quarterly goals for this initiative and here's how we are tracking week by week how you're progressing against that quarterly goal. And then what do you do this week? What are things that went well, what is blocking the team? And you know, just a simple lightweight template that people essentially there's a person who gets everyone's feedback into it or inputs and then crisps it up and sends it out and that kind of communication. So lightweight, massive unlock for everyone. Execs understand what's going on, other peer teams understand what's going on, your own teammates understand what's going on. And having seen it all, it also allows you to historically search back and say what's working and what's not. So I think that's an interesting best practice where the key is to make sure that you identify those initiatives and really you want to have across all the functions represented in that email to the extent possible. And really it has to be goal centric, where, what progress are we making against the goal and then what's blocking us from making progress, where are we on track, where are we gone and what are we going to do next week to keep moving towards that goal? So that means that obviously it's everything starts from setting goals properly at the initiative level.

What are great goals? That's something that we're, you know, Appsumo's goal this year is 120 million GMV. And we, we've had a lot of people internally be like that's a vanity metric, we don't care. And I worked at, when I worked at Facebook Market was like, I just care about signups, I don't care about anything. And eventually that evolved to daus and maus. And I'm trying to think through it for Appsumo, you know, as well for others, like how, how do people effectively goal set?

I'm sure you know this and you, you think of it also the same way. First of all, goals have to be smart, right? They have to be specific, measurable, achievable or attainable, relevant and time bound. So first of all they have to be applicable to a period of time. Typically for young companies it could be, for very small companies it could be weak. Then you slowly, as you go, it's a month and a larger company it's a quarter. Either case, it's one of those three time periods. Annual is you set some annual goals but then you tweak it every quarter and every six months. And then I think the other interesting thing is some goals people are like, well that's not measurable. It has to also work backwards from business metrics of the company. In other words, for a company there are some business goals you have, you have revenue, profit, you know, etc. Etc. And maybe there are obviously people goals also. So you work backwards on that. And you know, I think. What, what did you say, Noah? Your company's goal was gmb. You set the goal. You set.

Did, yeah.

And I think GMV is a good goal, but there probably has to be a check metric together with that goal where maybe you have to have a certain margin or take rate for that GMV which converts a GMV into revenue which then rolls back up or feeds back up to the top level company revenue goal. Because as you know, I mean GMV can be just like signups can be empty calories or you can have high GMV with very low take rate. That's maybe not as ideal as. Or it might be depending on your strategy, low GMV with higher take rate. So you got to. But I think every goal should have a check metric along with it which puts guard rails on that goal and make sure it doesn't go off the rails. Any goal. I also like to always show how that goal compares to the previous period's goal. So for example, I would say grow GMV to save GMV was a goal and we aligned on it. Go GMV to 100 million annualized run rate. Or maybe that's also 100 million is a challenging goal because I would say what is the in period GMV. So 8 million in this month. I want to grow it to 8 million up 250% over the same time period one year ago. So that way I can see what that percentage growth it is compared to one year. And I always like putting up or down, you know, in some metrics you want to go down like costs and so on. So I like that in that same goal you also put how does it compare to that same time period a year ago or something.

It's funny because GMV, our goal, we caught fraud. There was like 5 million in fraud. That, that hurt. That actually hurts our GMV goal. We're actually like not incentivized to catch, I mean obviously we want to catch fraud. That was an interesting experience to do that. You know, you've, you've started a company and you've been, you know, now an executive at these companies as well as an employee there. I'M curious that how you've thought about that in your career, because I think a lot of people like, I want to be an employee, and then all of you are like, I want to start my own company. And you've fortunately been able to do both.

I realized that they're all ultimately, you are serving even as a founder. One of the things I've realized over time is the founder mentality also has to be to serve your. Whether you're a leader, founder, employee, you're serving some set of stakeholders. As a founder, you're serving your employees. I was all as a founder for two and a half years. I was constantly. My biggest worry was I don't want to let down all these people who have trusted in me. And I've left amazing roles and I've come in especially being part of our team and company. How do I make sure whatever happens, I take care of them? And when you're a leader and leading a team, you know, you're always thinking about your employees, your team and your customers. You're obviously always serving. So to me, all of these things have basically blurred. And I have no particular pride and vanity in being a founder or I used to, I think when I was younger, 15 years ago maybe, but now I'm like, yep, you know, it's all a continuum, essentially, the staying on this.

Is that how you know, with all the experiences you had, how do you think companies can operate better? Like, if you go into a company like Appsumo, I'm selfishly asking, but like.

Other companies out there, like, what are.

Three things you generally see that companies can do that will, you know, kind of improve how they operate?

First of all, you want to make sure the company's mission, vision and strategy are absolutely clear and consistent. So that when you, when you ask anyone at the company, especially you start with the senior level and you interview them. And I think the very simple question I advise on newly onboarding execs to do is to do an internal listening tour. And in the listening tour, you ask four simple questions. And this listening tour, you do it with employees, even the CEO, peers, you know, people on the team, as many people as possible, also customers, board members, so all kinds of stakeholders. And you ask the same question and different people interpret it differently, these questions. But that's why it's powerful. What's working well, what's not working well? What should we be doing differently that we're not doing today? And then what would you do if you're in my shoes? These four questions and you Ask them over and over again to different people and you can synthesize. And I always believe the answer lies within. At Square, when I joined very quickly Within, I met with I think 120 people over the course of one week or maybe two weeks or something. I literally set up shop in a room and just literally like got my year to just schedule meeting after meeting. And it was amazing. You can suss out so many things. First of all, you see internally what the themes that are come out, that's working well. What are the things you want to continue. This is working well, so you want to keep doubling down on those second things that there's a certain set of things that everyone aligns. It should be stopped, we should not do it, but still the company is doing it. That's one of the first things. It's so easy. You can then stop doing those. The third thing is what should we do that you're not doing today? So again, what are the two or three new innovation or ideas that have been bubbling, but for some reason or the other, they're all, they're gated, they're not able to be unleashed. And you get that input. And then fourth, you get direct feedback and input from people. What should I do? Coming into this role? And everyone has opinions. It's incredible. And what you see, which is implicit with all of this is you get to evaluate the talent, you get to evaluate the people because you find not just from a talent perspective, but from who cares? And when you ask these questions, I actually sent out these questions in advance to the team saying, hey, I'm going to meet with all of you one on one. Here are the four questions I'm going to ask you. You don't need to bring anything, send me anything. Just come think about this if you can and come and let's just have a conversation. I'll take notes, I won't speak much. Some people actually cared so much that they wrote like multiple page documents and sent it to me in advance and shared it with me in Google Docs. And then some people brought like notes where they had scribbled notes. And some people just like, oh, those are the questions. I didn't check my email. So you kind of see the continuum and you basically say, you know what? That third category of person doesn't even care. They didn't check their email for two days. I don't know, that's probably a bad sign. They didn't read it. They didn't, they didn't even think about these questions. And so you basically realize maybe there are some people who are better, culture fits and these people really care. And that matters. I think at a startup, at a young company, any company you want people who care, who are not just there drawing a paycheck, who truly care about this company being successful. But those are the four questions.

With the recession happening or not happening, I don't know. How do you think people should be taking care of themselves right now, professionally, personally too?

I think everyone's stock price has fallen. It's March, May 22 and there's not a single company, I think maybe box or someone like that, stock price has gone. So I think the stock price is, you know, markets overcorrect and overreact. We saw every time things have gone down, even great companies have been trading, getting gravel, discounts. I think what you want to look at, you want to have a forward looking view. What is crazy to me is that people are people who are excited at any company, say at $100 stock price six months ago, are no longer excited being there at a trillion dollar stock price. Why you should be more excited, right? If you're excited at $100 stock price because excitement is a function of future growth and potential. If we're excited 100 thinking, we go to 300. Shouldn't you be even more excited at a $20 stock price? And so setting all that aside, I think the most important thing is is this a company in your heart of heart that you believe can be a platform company? I think ultimately I think the big winners in any industry are going to be platform companies, not product companies. And by platform I mean a multi product company where each product interlocks with other products that they build and creates compounding advantages for that company. It's very hard to compete with this company because they have this other product and this other product and the customers are out both of them and to displace them, you can't just pull out this product, you have to pull out both products and they, each of them provides data to the other in a way that you can't pull them out or they complement each other, each business line complements the other one or strengthens the other one. So I think you need to really think deep down is this a product company or is this a platform company? And forget historical, right now, do I see this company being able to grow and be one of the top two companies in the space they operate in? I think most of the value in any industry, any space, any sector accrues to the top one or two companies. And I think if you can't truly think of or truly convince yourself there's going to be a top two company in a meaningful space, probably time for you to think of potentially joining another company.

How does someone transition from a product company to a platform company?

Every company like you alluded to is a product company to start with because you have one product which serves a very specific need. The transition to platform company happens when you start your second product. And I think it's very important to think about that second product. That second product is what, if chosen right, can make you a platform company. There's two or three characteristics I think that hold true of good second products. Second products ideally serve the same types of customers and have the same decision maker, but they're also one degree away from the first product. What I mean by that is I'm looking at a product like Square Capital. Square's first big product was Square Payments, where we did payment processing for small businesses. The second product was one degree away. It targeted exactly the same customers as Square Payments, but then was also in the same dashboard. It literally was an email. I mean, there was a lot of. It was a tip of the iceberg. There was huge complexity behind. But the only way the product manifested itself was a message you would get in the Square dashboard that said, do you want to get a loan of $200? And if you press yes, that's it. That's the product. You get a loan of $200, deposit into your bank account and repay it. And it has to leverage all the competencies, all the strengths, all the assets that the company has built to the first product. Square Capital leveraged the underwriting engine that was built. Square Capital leverage. The ability to communicate this much is in a very seamless way. The fact that Square already had the bank account, the fact that Square already could keep money back a little bit from every payment to repay the loan, all of those things. The second product should actually be super easy to build because all these assets are already in place. If you find yourself building a fully new product as a second product, you're probably doing something wrong and it's probably not a good second product. It's almost a feature, almost seems initially like feature of the first product, but it's a separate product, a separate job to be done that it satisfies the customer. But once you have that second product, the two should just like we saw this, I mean, Square Capital. Most merchants use Square Capital to buy more inventory and grow their business. And when they grew their business, they took More payments. And when they took more payments, they took a bigger loan. You know, it was just a beautiful flywheel. So second products basically accelerate the flywheel that you put into place with your first product.

I like that. Yeah, we were kind of all over the place at AppSumo with that. We're like shooting everywhere, like, oh, let's see where it ends up. But I like the strategic and intentionality also. You know, one thing we were doing today was we were going through all of our subscriptions at AppSumo like Twilio, SendGrid, Klaviyo, all these companies. And I was like, all right, who can we cancel? And it was actually really fascinating to be like, well, if we cancel them, we lose money. If we cancel them, it costs us time. You know, then you think about it for your own business. Like, how do you get to that place where people are like, oh, I can't remove it in a good way. Like, ideally they need it.

You almost need to do zero based budgeting for those kinds of things. Assume you're starting with a fresh slate. No, none of these tools. Which tools? Which is the most essential tool is the second most essential and why? And then you basically decide reverses right now. It's true for almost anything. You try to do zero based budgeting as much as possible. Start at the fresh L and see which ones you would. You would basically adopt today.

That was great. Gokul, you're the man. You're like, I just love talking to you. I hope you get everything done. You can enjoy the family tonight as always.

Thank you. All right, brother.

Well, that is a wrap. I hope you love the episode as much as I did.

Making it.

Go follow Gokul on Twitter. That's G O K U L R on Twitter. His stuff is so amazing. He also has articles. You can search them. Gokul rajaram on medium.com next. Text a friend you love him. Yo dog, let's go watch the warriors game together. I hope they win the championship.

I know they're going to win.

I don't know they're going to win.

Actually, but I hope they do.

Before you go, tweet at me or slide in my DMs or check me out on TikTok at Noah Kagan. That's K A G A N. Let me know what you thought this episode.

Or just holler at your boy.

Also, go subscribe to my newsletter, send fox.com/noah to get my weekly email or create your own newsletter at sunfox.

Com.

And lastly, I got a YouTube channel. You're already subscribed to it, but if you're not, subscribe and like YouTube.com okay dork. Finally, a couple shout outs to the amazing team jasonodcasttech.com for editing these episodes.

I hope I see you this summer.

Thank you to Mitchell.

I love you dog.

Jeremy, George, Hubert, Sasa and Jen plus Nikki from the Dork team for all the magic y' all do. Finally a shout out to the appsumo original scene. Garrett, Marnie, Ibaldo, Serba, David Kelly.

I love you man.

They launched a bunch of new things for tidycal.com if you're using another scheduler and actually paying money for it.

I don't know why you like burning that money. Why don't you just like burn it on the street?

Stupid. Go use tidycal.com for your calendaring. If you have coaches, you can actually get people to pay you through it or do group hangouts through it. That's tidycow.com.

Have an extraordinary day.

Where's your favorite place to camp?

No one even answers these anymore.

Why am I yelling.