Hiten Shah on Building an Enterprise Startup

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 Venture Stories by Village Global. I'm here today joined by Heaton Shah. Heaton, welcome to the podcast.

Thanks for having me.

So he and you are a longtime successful entrepreneur investor also, I have to say, one of the biggest mentors in Silicon Valley. I remember when we had a nice sat down when I was very early on in product hunt, before it was meaningful and you're known as someone who is willing to spend the time and take chances on people before it's obvious. And I just wanted to say that before we got into it because it's appreciated and I hope that others follow your example.

I appreciate that sentiment. I think one of the most memorable meetings was the one with you where it just we're not going to talk about what we talked about because that was a long time ago and like things have passed and you're much older and so am I at this point. But like it was one of the most insightful conversations I had in terms of being able to process what you were going through and kind of mirror it back. So I would say that like to start this off like I'm just a mirror. I tend to be a good one. That's what people say. It's all I can do. I think that's all any of us can do when we're helping other people.

Totally so. And you've also been enormously helpful in the on deck community for people who are looking to start or join their next company. And you meet with a lot of entrepreneurs in transition and I'm curious how you think about frameworks for picking startup ideas. A lot of people, because more and more today people are willing to take the risk, leave their job, not necessarily know who their co founder is, not necessarily know what the right idea is. They might say, hey, I'm looking at this market, I'm looking at this market. How are you sort of advising startups on startup ideas?

I used to spend a lot of time with people starting new businesses and that was at a time when I think the world was very different. There wasn't as many of these podcasts, there wasn't as much content out there. This was pre like even like startup school from Y Combinator where those videos, even though they're aged now a little bit, they're so good. Like if you were to ask me where do I Need to learn. I'm like, well one, you should talk to people, fine. But really, like, everything's online, right? Like, nothing I've said, nothing I can say to you, you can't read about whether it, whether, you know, my presentation of it to you or my thinking with you helps. Like, there's nothing that's not out there. So I've actually spent a lot less time in the last couple years with people starting new companies. Part of the reason is also because I think that so many things in terms of like, when you think about this, it's like, it's almost like, you know, that saying about, like, you know, the rising tide, you know, raises all ships, boats, whatever. The rising tide here is the fact that knowledge of how to start things is out there. So the first thing I'll say is you have no excuse.

You have no excuse to say, hey, I don't know how to do this, or I can't do this, even if you don't know anybody. And that wasn't the case when I started on the Internet in 2003. It wasn't the case when I started my first SaaS company in 2005. And it definitely wasn't the case even like five years ago. Right. It wasn't the case where like without talking to anyone, you could figure out how to build your own business, whether it's self funded, some call it bootstrapped, or you want to go after venture funding. The knowledge is out there, the information's out there. And there's a lot that's changed in terms of our ability to go find it. And the evidence there is twofold. One, there's more startups than ever. Like there's like tens of thousands every year is kind of the last metric. I heard someone said 20,000, someone else said 40,000. I have no clue anymore. And that wasn't the case and hasn't been the case when I was more actively helping on a regular basis. There's a lot of people you can learn from and a lot of things you can learn without talking to anyone, like in person or anything like that, or even on a video call. And in terms of evaluating ideas, my whole point here is I myself, on the things that I'm working on, I believe I have to spend so much more energy to make them work than ever because there's so much more out there, period. There's more options for anyone who's trying to buy a B2B product. There's more options for anyone in your kind of private life as a consumer in terms of the sort of choices you have on the products you can use to entertain yourself or talk to your friends or whatever. So in a world of plenty, what do you do? I don't have an answer on how to evaluate a startup idea anymore. If you ask me back in the day, it's like there's some obvious things, right? Like.

The Y Combinator mantra of build something people want. I think today I would say build something people want to buy. I'd add that on. I've been saying that for a while. Even if you're building consumer business, you're still building something someone wants to buy. At some point, they want to buy something from you. They want to buy ads from you. Well, if they want to buy ads from you, you better have a product that has the right sort of system or the right experience so that people are using it often enough so that you can actually monetize that experience. If you're building a B2B product, you actually don't have true product market fit unless someone gives you some amount of money for what you're doing. So you cross the penny gap. So when you look at it like that, I don't think it's as much about what's the idea. And I think it's more about how does that person think about getting to what I call.

The race to the spreadsheet. And the race to the spreadsheet is this idea that you're able to figure out what is the path for the business or the type of business I want to work on, what's the path to getting to a spreadsheet? Where the numbers are the actuals in the business. And that could be usage, it could be retention, it could be whatever you want. You could say it's like getting to the right metrics and amplitude. I don't care. Right. But it's like there's an experience that's out there for the customers that you have, that you want to create based on the business you're in. You should be figuring those kind of things out. Now, if you want me to be super prescriptive about evaluating ideas, I think it's really the eye of the beholder and the person who's creating them. And so the thing I would say is like the thing that I'm not seeing enough conversation about and enough knowledge about online probably at all, is this idea that I call what are the conditions for success for what you're getting into? And because of all this knowledge online, you should know. I mean, I just mentioned one. You're building a consumer product, it's ad based monetization. You better have pretty regular daily usage and high time on app time, in app time, on site, whatever. And I'm sorry if someone feels like, hey, that's bad for the world. That's not what I'm talking about. I'm talking about you building a business and what is going to be required for that business to be successful at any kind of scale. Right? So to me, I like to identify what are the conditions for success for whatever I'm doing, what I want to get into, whether it's a B2B business or a consumer business, or a marketplace or a hardware business or whatever. And am I ready to go after it? Can I define what these things are and how do I systematically figure out what the business is here?

Walk us through how you did that. With FYI, in your own development, in your own journey.

You consider experimenting with different ideas. What was your sort of navigating of the idea maze and the market determined this is the best opportunity, the best opportunity for you.

I think everyone has a specific skew, I used to call it, and I'm not sure where you fit in on this skew. So it's an interesting thing, but it's like a spectrum. It's not a skew. It's like either you're a pirate or explorer and there's a spectrum there. And I tend to now try to figure out how to be both at the same time and have different lenses or hire people that are different than me. And so in general, my perspective has always been be an explorer. And as an explorer you're actually looking to find unique opportunity. Unique like a new land, like Columbus style, so to speak, or he accidentally found the new land, try to find existing land or find another path to existing land, but there was still some discovery there. While if you're a pirate, you tend to want to start by seeing what someone else is doing or some other company is doing or some market opportunity that exists in an existing market and go after it. So when it came to FYI, my co founder and I tend to go for something new and unique. And we knew that about ourselves. So we created the processes to do that by starting from what many would call first principles around what's the problem here? What's the problem worth solving? And we failed a couple times. But at the end of the day, the conditions that were always the same and didn't change across the businesses as we stepped back and thought about it like, well, we want to build a Free to paid product. So a freemium business, we want to build one that we can charge per employee per month or per user per month. And we want to build a business that can spread within a company and in between companies. Those were our criteria.

And why did you pick those as principles?

Two reasons. One, ultimately in the long run you want a business that has the most. We wanted a business that has the most potential to spread word of mouth. And when you have a free plan that free businesses, any kind that people don't have to pay for, tend to spread faster, especially if like obviously they have product market fit and things like that. But so that's a big criteria for us. The fastest growing SaaS companies tend to have, have free as a big component to their business once they figure out free. So this is not the case early on actually. Other like free trial businesses, demo based enterprise sales, all that actually tend to go much faster early. But in the long run you end up hitting these bottlenecks around customer acquisition costs and ability to scale the number of people signing up for your product and things like that. Unless you have a free plan. And then if that free plan also has built in sort of virality and ability for people to refer each other the product. And as more people use the product, it gets better over time for every individual that's using it. I mean those are really powerful drivers for a sort of long term massive B2B business. And the other part of it back to like know thyself type of thing. We know that that's rare, right? So you're going after something challenging. And so that criteria is what we basically kept iterating, what we were building, what we were doing until we got to, that got to a point where we feel really good about the current business with FYI and what we're building in the future to be able to hit sort of that criteria.

And just for the audience that may not be familiar gave maybe the 32nd of FYI.

Yeah. So today FYI, the homepage says, well it might not by the time this is out, but it says find your documents in three clicks or less. And what we're doing next with it is basically adding the ability for teams to collaborate. This is a product that connects to all the different apps you use at work and helps you essentially find information. And long term that's what it will be. And there's lots of different lenses on how that kind of gets realized. And so we've spent the last about year and a half focusing on how do we build a product that an individual personally and in a company wants to use on a daily basis personally, without even having any of their team members in the product. Because we feel like that's almost like the atomic unit of engagement inside of a, inside of a business or even in life around productivity tools, which is I can personally use it. So we've spent the time doing that and we've also discovered what the opportunities are around all those criteria I mentioned in the process.

Talk about how it's different, the ways in which it's different, building an enterprise company today in 2020 than it was almost a decade ago when you were building cosmetrics.

I think it's easier than ever to go reach an enterprise customer and talk to them. And that's amazing. The amount of companies that I've seen over the last, you know, 10 plus years, 15 years.

Like be able to reach enterprise customers actually get their money is incredible. And I think a lot of that has to do with freemium free trials employees at large companies being able to pick something up and just start using it. And that is definitely a new thing. So ability to reach those customers is like I think 10 to 100x easier. That also means more people going after it, which is all good. And we have so much knowledge about how to do outbound emailing, outbound sales, and all kinds of tools and tricks and stuff like that for it. So that's, I think, a big deal. And a lot of people talk about things like consumerization of enterprise and there's all these buzzwords around it. But ultimately the simplest way to think about it is if people are using really well designed, really usable products at home. Even like things like the, you know, Internet of things or whatever home products we have, whether it's a Fitbit or an Alexa, they're super easy to use, super easy to set up. I mean, I just switched my MacBook. Oh my God, there's like one wire. I didn't do it through wi fi because the article said don't do it through WI fi. And it was a completely night and day than the last time I did it, which was three years ago. I was up and running with this new computer with everything I had on the old one, which is like, you know, hundreds of gigabytes of information on the new one perfectly in 20 minutes. Same with the phone. They just put them next to each other in some magic app and you're like, what is this icloud and all that thing? You don't even care anymore. Last time I did that, like A few years ago I just got a new phone, I got a new laptop. But like last time I did that a few years ago, it was not like that. And at work you look at like, sure, like if you're a smaller business, a startup and all that, you're using the newer stuff or using new notion, airtable, figma, et cetera. And you might feel, even though some of those have clunky experiences here and there, you might feel that as close to consumer as possible, while the folks who are in larger companies are still using things that were built in 0506-0708, even 2010, and they're just not the same. And so there's a ton of opportunity there where it's like the mindset that people have and the psychology they have when they're at home and the products they're using and how easy they are to set up, how easy they are to use, we don't have that at work yet. And so I think there's tremendous opportunity to build more things for work that just reduce time spent in the tool, increase productivity, reduce the amount of switching between apps and things like that, or even the amount of.

On a slight tangent on that, the amount of interconnectivity between apps is also incredible thanks to Zapier and IFTTT and things like that. So I would say that the expectations we have of the products we use as consumers are barely getting to the enterprise and that's another huge wave opportunity. Whatever.

Yeah, it seems that all the founders who are building consumer apps and companies five, ten years ago are now building future work companies or consumerized B2B companies.

That's what it seems like.

Yeah, let's get into that a little bit. You've been angel investing a long time, but let's say you are fully focused on a fund focused on future of work. What might your investment thesis or request for startups or where might you focus or say, hey, here's the white space, here's opportunity.

I always think product first and I have a product mindset. My first step would be like, what the heck is future of work? Aren't we always in the future of work? So first it's the nomenclature and the terminology. So I'm assuming you're assuming like it would be like a seed fund or early stage fund. So I'm just going to be super prescriptive. First thing I'd actually do is go talk to all the later stage funds and figure out how they think about it. So for example, Sequoia has been Known to do a lot of analysis of markets. I'd want to know how they think about future work. I'm upstream, I'm safe. They might do seed rounds, but I'm still upstream to them. I'd go talk to the sequoias of the world, etc. Anyone that's putting out future work thesis and just document everything I learned from them. Because I don't think anyone knows what the future of work is. And the people who are investing are the ones that are actually greatest at risk of missing out on it. So I'd start there and just get their whole vantage point. So that's one side of it. I think the other side of it would be like, what are actually the real problems people have at work that they need solved? And what's changing about work that's causing these problems to sort of exist? And, you know, I have my own vantage point on that based on the product I'm building that connects to all the apps that you use at work. That being said, as an investor.

Some people talk about how your job's to predict the future. Other folks talk about how your job's to understand the present. There's all kinds of theories. Everyone's got their whole thing. Every investor you talk to, literally, they're all unicorns and unique. And I shit you not, that's the truth. And that's cool. That's part of the fun of being a founder and talking to these investors. But as an investor, it's like they define what the heck this is. Not just like market maps and stuff, but like come up with some kind of thesis where you're able to say, okay, this is where we're at today. And I really do believe more in the ideology of. An investor's job is not to predict the future. An investor's job is to understand the present.

And so I would try to figure out what's going on now.

I think future work is actually bullshit. Yeah. Because we're always in the future of work and things are changing more than ever, faster than ever, even inside of enterprise. And so I think it's funny that a lot of investors have that thesis. I'm wondering for how long they had it. Right. And is it a bubble around that terminology or is there really something there? So what is it? And the other thing is, when you think about future of work, there's actually two very distinct categories. One is employment and everything around that, from freelancing to remote work to all those things. The second piece is actually productivity. Those are the only Two categories I've found that exist. So are we really talking about the future of work? Are we talking about new ways of working? And are we talking about just evolution of productivity? Right. And how we think about productivity today? Because a bunch of stuff has changed. So, you know, like, to me, it's a research project, right. First, and that's what I would do. And I'd really focus on the upstream because as a early stage investor, your ability to have conviction on founders and how they think about the world is probably more important than anything else. And so this will help you inform that and see directionally, like, who's got it right. When you can think of like, okay, these folks who are like doing later stage investments, how do they think about these things? These folks who are actually. Another angle would be like the folks that are actually working at companies that are buyers of future of work, whatever that is, how do they think about it? And then, you know, it's really just like, what is your special secret sauce or special angle on how you add value?

And for, let's say, productivity, for example, is there a. Have you made investments there or what opportunities are you excited about? Is there an opportunity for like a superhuman, for a calendar? Is there like, you know, OS in FYI's doing something here? How do you think about productivity?

On the most basic level, it's figuring out where people are wasting their time and just going after that. So I think a really good example from a personal investment standpoint is I was an early investor in front and this idea of a shared inbox just made sense because people were wasting time trying to figure out how to manage these mailing lists, like press support and this inbound email that was coming in and there's this pattern of like multiple people working on it, and it wasn't easy. And front makes that easy. And honestly, until they came around, and even till years later, there weren't really any competitors around it because it was like this idea everyone was confused by and didn't understand. But at the end of the day, it was very logical, right? It was very obvious in some ways of like, oh, there's shared inboxes that exist in almost every organization on the planet and they either get sent out to multiple people and then all of a sudden you lose track of it and then all your kind of communications with the outside world end up getting a little messed up because nobody knows who responded, who didn't, et cetera, and they're using all these hacky ways to do it. And then all of a sudden There's a productivity hit in your company. So you're really looking for opportunities when it comes to productivity. On how can we make people's lives better by saving them time? Right. It's not about money, it's about time. And time is actually, you know, the number one cost in most companies is headcount. And that's really about time when it comes to productivity. So I think Front's a really good example of seeing the present state of things and knowing that there's an opportunity with that business going forward.

You know, I see you as being one of the pioneers and really being there. Even before sort of growth hacking took off, as it turned well before, how have you seen sort of, you know, that was, I don't know, 2009, 2007, I don't know when it was. How do you see sort of growth and go to market, sort of evolve into how, especially for enterprise businesses, how people are thinking about that in 2019, 2020 and how would they ever think about it in 2008?

I think it goes back to that idea of plenty. The more there is, the more we need to wrap our heads around things and figure things out. So back then, historically in software specifically, my first software product that worked is called Crazy Egg. It was launched in 05. It's a self funded business, still exists today. So that's 14 years later. My wife runs it. And.

It's incredible how easy it was to launch something back then and get people excited. And it's incredible how hard it is today literally to get someone to pay attention. You can't get signups as easy as you used to. Right. So when I, when I think about a lot of those kind of shifts in the world.

And this sort of ideology of growth, it's like we went from that which was. It was actually easy. Like we actually launched on digg.com back in 0506 and pre product hunt servers went down. Yeah, right. Servers went down. More traffic than we've ever got from product hunt on any launch.

That's amazing.

It used to be like it started actually with the TechCrunch effect where you used to get that kind of. Not that kind, but I would say you see a product hunt traffic when you could get up on TechCrunch like that level of traffic, servers wouldn't always go down unless you were kind of weak sauce there, which is fine. Shit happens. And then the dig effect, which was tremendous for everybody. I mean even like content sites would go down when they got dug or digged or whatever. And then now you have product hunt and all that, which you, we all know a lot about now and how that all kind of took place and worked and you had a great part in that. And so we went from like this world where it was easy and you could put something out even if it wasn't unique and people would love it. I would call that the Pre Ruby on Rails 37 signalization of the world. Now we're in this era. Then we came to this era where it was like, okay, there's all these apps out there and stuff, like, how do we grow these things? And then actually the growth hacking, specifically terminology was.

Coined by Sean Ellis at a bar in Southern California where him, myself and a friend Patrick were just talking about the thing and he came up with it and we were just chatting about it. I think it's taken off a life of its own. And just like lean startup and many other terms, like, they jumped the shark at some point and everyone thinks they know what it is. Nobody really knows what it is anymore. And it doesn't matter because it just becomes embedded. Lean startup is actually embedded in every company. Even if they think they're not lean, they're doing five aspects of it. So for example, if you're on your engineering team, you're doing continuous deployment, tons of unit testing. Guess what? You're a lean startup. Sorry, that's a core tenet to it. From an engineering standpoint, you iterate fast, you ship every day. Well, everybody does that.

When you think about this stuff, I don't care anymore. I think it's a whole company's job to get growth. It doesn't matter what part of the company you sit in. Doesn't matter what you do, whether you're in finance or customer support or whatever, you're doing that. And that's what happens to these things. They just become common knowledge. They become something that if you're starting out today, you don't really care about growth hacking. But there's some article that talks about optimizing signups on your homepage and you're reading it because you don't know how to do that. Well, you're growth hacking writing, you know, in my air quotes, as I say it. So I don't know, man. Like, it's everywhere. So much content out there now. And like, the terminology always, like, it surprises me how hard it is to keep a category of like, concept or a concept like that. Yeah, keep. Keep it on people's mind and still have steam.

Yeah.

So, you know, the funny thing is Like Sean Ellis coined the term. You know, the most fantastic thing he did though, and it's something I learned from him personally, is the product market fit survey.

Oh, say more about that.

So this is a survey where you ask how disappointed would you be if this product no longer existed? Well, guess what? Rahul from Superhuman comes along and essentially uses the methodology and talks about how successful he is with it in a first round review article. And now like every time I talk to a founder that wasn't around back then is telling me about it and I'm like, so. And I'll leave it at this. So my concern is that we're just circling around ideas that are a dozen years old. Where's the new stuff? Maybe there doesn't need to be totally fair. Where's the new stuff? Because nothing Rahul said is new. It's just new to so many people because now there's like I don't know, 10,000 times the amount of people that were out from 12 years ago. Because I think Chantalis came up with that popularizer around 2007. That's way more interesting and useful to a business startup or not, that whole product market fit surveying that he did than any growth hacking thing that's been written or done. Because growth conversion rate optimization existed before growth hacking. That's essentially the same thing on a very high level. So like I just keep shrugging at you at all this stuff because it's like this is I feel like either an old man, a historian or missing something because I'm really stupid. Like I don't know. But all this like what's old is new again is all I keep coming back to.

I'll take historian a few branch out questions. One is when you are advising Mathilde or the next Mathilde because maybe she's old now. You know, Front has done very well on go to market or founders who aren't trained on how to think about go to market. Particularly in enterprise. What do you find them advising or what mistakes do they typically make or misconceptions do they have on?

Yeah, I can speak to my own experience because I'm in the middle of this right now. But like I think that no matter what, the most effective sales is founder led sales. So the thing that the best end up doing sometimes accidentally. I actually got to give YC props for this. So some of the pressure they put on, some of the ways they think about it have made.

Some huge strides on how founders think about sales. So I would say that from an enterprise or a B2B standpoint, you have to know that eventually your product has to hit the large companies or you will not grow. It doesn't matter. Even if you're SMB targeted, at some point, these things cap out. And that could be that it's not about enterprise sales for you, like Fortune 500. It could be that it's about using agencies as a channel partner to get to SMBs. I don't care. But there's some form of sales that feels enterprise Y or feels like larger contract or like you have to do a bunch of negotiation or a bunch of org chart mapping and things like that. And I find it that whether it's channel sales, like going through agencies or direct enterprise sales, depending on what your business is.

Where founders tend to be light, I can't say they're lighting a lot of stuff because that would go against what I just said, which is like, there's a lot of content out there. But that's the area where like, if I were a founder and I was thinking of, and I am one right now, and I have a freemium business and has this criteria, you could say, hey, you can completely ignore enterprise customers and stuff like that. Actually think the opposite. I'm like, I have to pay attention to them because otherwise I don't know where I'm going. Yeah.

And compare the different groups you just mentioned in terms of the different approaches that one might take to each.

If you know that your product can service enterprise customers and there's a line item, there's a budget, I would focus on budget and then I would go do sales discovery as soon as possible. Even before you're ready, five, people will talk to you, people will talk to you. That's not the biggest problem because at least then you know, okay, where am I headed? Is there opportunity there? Is there not? So I think it's a lot about like problem market kind of validation there of like, is this something where I can sell to enterprise one day? If so, what do they need to buy something like this? Or what are they buying currently in my category? So those are some thoughts there. And that has a lot to do with just learning how to do outbound emails and sending the emails and dealing with rejection and getting on calls and just talking to them and learning how to do all that. Got to do it yourself. That's one approach. If you're going to use channel partners like agencies, it's more of a business development sort of angle. And I only bring up agencies because HubSpot's been super successful. I think 40% with this, 40% of their revenue comes from agencies. There's stories out there about how it was accidental fined by one gentleman over there that was working on optimizing some forums and saw that high percentage of people are agencies and HubSpot didn't do anything about agencies. And all of a sudden now that's like not all of a sudden years later, it's like a big channel for them. So there it's just like go talk to agencies, see if they can get you to the SMBs you want because they're already servicing them. Like who actually helps your customers and can you go partner with them? Right, Those are the kind of things I think about.

And how do you advise for the best startups and the best ways to pick customers? Whether it's type of customer, SMB, enterprise, others, or even by sector or by industry. How do you think about customer selection?

I think it's always about pain. So early on when you have an idea, it's about figuring out who has the most pain for it or sorry, not for it. Yeah, basically who has the most pain for what you're looking to solve. And if you can identify that and talk to enough of a group, you'll figure out who's right for her. Right now what you're really trying to do is try to figure out who's your earliest adopters. Now the markets are very large. There's so many companies out there, so many. I mean even startups are our market. Like you could get to tens of millions in revenue these days just by servicing startups. But if they don't have any pain, you won't even make a dollar from them. Right. Or keep a dollar from them. So to me it has everything to do with like doing enough either research, conversations, building something fast, getting it out to them, whatever your method is. I'm not very prescriptive about that. It's usually what's fastest for you and figuring out who cares. Basically, who gives a shit?

And how about pricing? What's the best way to think about pricing or any rules of thumb there.

If you're able to either spend money or have a volume of customers. There's a lot of pricing research and survey methodologies that you should absolutely use if you have enough capital to put at it or if you have ability to reach the customer and enough of them. And there's a bunch of research methodologies using survey. So that's one angle. The other angle is just put up a page and charge people money. What you're really looking for when it comes to pricing is you're trying to identify what's the best value metric for your business. And there's two things there. There's one which is like, like I mentioned, per user pricing for FYI. We know we wanted that. So that's one aspect. But the thing is, like, we need to understand as a business, just like everyone else does, what's going to cause people to not just buy, but what's going to cause them to upgrade. And how can you determine a value metric where, like, it's almost like as aligned as you can get it, where as they're more successful, they're willing to pay you more money.

How about sequencing in terms of people don't know when to. When to start charging, where they chart from the beginning.

If you have time and you really feel convicted on being able to wait to charge, then wait. Most people don't have time and they don't have as much conviction on waiting. So then charge as soon as possible. That's the right answer, is always charge as soon as possible. The caveats are like, well, if you have a bunch of capital and your product might be harder to build or it might be so new that that you have to do a little more discovery to figure out what the real pain is. And what people are willing to pay might take longer. But usually putting up a pricing page and putting a credit card gate somewhere is really beneficial. So charging as soon as possible is the kind of generic advice. I think the caveats are like, if you're building a freemium business, you need to make sure it has high retention and it spreads. And those two things are really important. So unless you're just using free as a marketing tactic, which many people propose, the then you're just using free to get people to that point where they need to pay. But really, for us, the way we think about that is we have pricing plans. We don't care about the revenue coming in. We need to make people feel like they can trust us when they connect all these apps. So we have a pricing plan, but really what we care about is learning about retention and adoption before we care about pricing for our business. Because it's a freemium business, very much like the business model Slack has in terms of how we think about it. And so if you charge for that too early, then sometimes you get so hooked on that revenue that you never build the free part of it, and you don't build the free part of it, then you don't learn about what's going to cause people to upgrade and then you end up with this sort of business that, again, if that's your criteria, go for it. But our criteria isn't just that we want to have a massive user base. And the way to do that is have a free product.

And let's go into adoption and retention. How do you think about, you know, 2020, what channels, or how to even frame adoption and acquisition?

There are so many.

Channels and methods on acquiring customers today. And so I still find there's a book called Traction. It's by, I think his name's gabe. He started DuckDuckGo. It's still a great framework for, like, experimentation. So I think channels are all marketing, and acquisition is all about experimentation. And the book actually lays out the framework and tells you how to experiment with channels and how to determine them. What I really love about it is they start talking about what market are you in, what's your category? And can you dissect what other people have done in the past to be successful? And then you're essentially just experimenting with those same tactics in the new world. Because it's obviously a new world. You're doing it now and trying to figure out what works. It's that basic and simple. And so even if you don't know anything about marketing, if you read that book and then go start just using the framework, you will get really far with marketing. That's my answer. It's actually a book recommendation, right? And then obviously applying it, that's acquisition. I think in terms of adoption.

The way I think about that is like, you have a product, people sign up for it. What you really need to figure out is why were the people who were not, who did not take the next step after signup, why didn't they not take the next step? And on the same sort of, on the other side of that coin is why are the people that actually did take the next step take the next step? So a good example is, let's say you're building a project management tool.

Activation. So, like, the point where you feel like someone's activated on a project management tool tends to be they created a project and they invited like two people into it. So what I would try to figure out is how come people who never created a project, why didn't they not create a project? And the people that did create a project and even get to that point, what got them there? And so then you start figuring out things like, is it a certain type of person, Is it a certain role, is it a certain type of company, is it a certain use case and once you really map that out, you're like, okay, well we take all those learnings and change our product and double down on the flows and the way we email people and the customer success strategies to make it so that we have as many people as possible getting to that point of activation and likely to be retained with the product.

And how about retention? What's a philosophy or framework for thinking about that?

I think it's an area where people don't spend enough time. If you were to ask me what's the next growth hacking, it's like some framework or some way of understanding retention and it just doesn't exist. In terms of retention. I like to bucket it into some kind of buckets oriented around like week one, two to four and post like week four. So week five plus. So those are buckets of retention. And then from there at those different levels you're trying to figure out a bunch of stuff, right? You're trying to figure out like.

What happens in the first week for people who are retained for that week, what happens in week two to four for people who are retained then and five plus. So I bucket out retention into time based cohorts of retention and figure out what's gonna cause it. I think the most controversial thing that I say when I talk about retention is like, no matter what your product is, you can get daily retention. A lot of people have this weird belief. I call it weird. It's probably just like a normal belief that certain types of products have a certain cadence in terms of we can only get people to come back every week, we can only get people to come back every month. And I'd call a little bit of BS on that and be like, you're telling me you can't add value to someone's life every day based on what they signed up for and what your product is. And that's bullshit. Like you can, you just need to figure out how. What are they doing around your category, what are they doing around what the intent is of your product that will have the highest potential to bring them back daily. And for A B2B products, really, how can you get in their workflow? Daily workflow. So I'm looking to identify daily workflow oriented.

Opportunities for any type of product or business. And I've had people shoot all kinds of random thoughts at me about like, oh, I'm in this category and it's like this, I'm like, well, what can you send them every day? What email can you send them every day? That's actually highly likely to be valuable to them. It's not about like, oh, let's go do a bunch of notifications and stuff like that to go get retention. It's more like how do we actually add value to their lives based on what they signed up for and what the category of product we're in is. And I feel like not enough companies are spending enough time on those kind of challenges. Also the last thing I'll say about it, and again, I feel like a broken record on this, but not everyone kind of has heard it or read the read the stuff. But the most meaningful retention lever is onboarding. When people sign up and the first set of things they experience has the most impact on the kind of retention that you end up having.

And what are the different frameworks of onboarding? People know the because if they read the first round review article on Superhuman that they had their very sort of hands on onboarding. They do calls with their the customers. What are their different approaches to onboarding or what's most important to figure out in the onboarding flow?

I think they have a high touch process in a existing highly competitive market with two or three established players and they built on top of one of them anyway. And we'll probably build on top of the other one, Microsoft and Google.

So their case to me is somewhat unique in the sense of like.

They'Re hitting an existing market that's very crowded and are providing a premium product. And so they need to provide a premium experience and they've learned what that premium experience looks like that gets hopefully retention. But nobody knows because they haven't shared their retention numbers or their churn or anything like that. So that's still questionable as to how successful that approach is. And we might never know because it is what it is. So that's one approach which is more high touch. But at a $29 a month product, I'm not sure if the ROI works out right and if you can scale that on a high touch approach. So there's a big question mark when you do that stuff. So I like to do that stuff to learn what's gonna cause people to actually use this product and retain. And you can do concierge onboarding actually in the sort of micropreneur world. So the bootstrap self funded lifestyle business world, they call that concierge onboarding. Even in lean startup they call it wizard of Aura Oz and there's all these other terminology for it, but whatever.

And so all you're really doing is hand holding people to learn. So I really Love that. But then what I'd want to do is how can we, as quickly as possible, go build tooling and automation around it? To Superhuman's credit, they have a game that teaches you shortcuts. They have tooltips for shortcuts. And now a lot of other products have that, including Gmail, probably because it's Superhuman. Right. And so I think there's a high amount of learnings you get when you handhold people through the product to understand what's going to cause retention during onboarding. I would almost suggest that to everybody to do for a period of time so you can really understand what the drivers are and what people say in their heads. Because you can't really get the psychology of people until you're literally talking to them, watching them walk through it and hearing what they have to say and finding those patterns with people Outside of that, like, I'm not really a fan of wizards and tool tips and like helpers. I'm much more a fan of like single, during onboarding, have single use screens that you walk people through that you know if they do these things, they're going to be retained. And so I'm just looking to figure out what are the things people need to do in order for us to retain them and how can we bring that as up front in the product experience right after they sign up as possible.

What are some or one of the mistakes that you find enterprise founders are making today, or that you're advising founders or that you think or flip side, what are the things that enterprise founders should be doing that they're not yet doing?

I think the one word is positioning and really being able to identify who cares about your product, what they care about.

And having some framework of thinking about that. So thinking about the customer a lot more precisely in terms of positioning at the end of the day and how to position the product. And there's some great books on that. There's a new one called Obviously Awesome. It's a framework for helping you nail your positioning. So what you'll realize when you start reading it, if you haven't done this work before, is that there's a lot more questions than answers to the framework of like being able to identify who the customer is, what they care about, what the value props are, and things like that. And then you then have to go do your homework with your actual customers or potential customers, figure out what they care about and fill that stuff in. Once you fill that stuff in, life becomes a lot easier. Any kind of marketing you do, you know who you're targeting, you also know what you're targeting them for and all kinds of things like that. So I like to work backwards from sort of some of those frameworks that are really valuable and they're very like some people will think they're boring. Right. So founders make the mistake of like thinking this stuff is like either MBA oriented stuff and they're trying to get away from that or that it's not useful to them. But at the end of the day, at some point you're going to hire a marketer and they're going to need to know that stuff. And if you've already done the homework and gotten super far before you hire someone to solve that problem, you're going to be better off. So I think the high level mistake I think founders make in general, B2B or not is they don't understand how to become learning machines and get good enough at something until they can hire someone for it.

Totally. I want to name a few spaces and just get your takes your perspective on them. One is do you think there's an opportunity to build a huge company in the calendar space? And why hasn't it been done yet? And what do you think the approach should be?

Yeah, when you think about productivity, because that's another productivity kind of product. It's like what's the wedge? So if you ask me who's gonna be the superhuman of calendar, it's gonna be superhuman once they get their act together and build out proper calendar. And I say act together cause I'm just curious why they haven't yet. And I build product, I understand it's more of a challenge to them. When are you gonna build a calendar? Cause they obviously know how to build really fast usable product. I can't take that away from them. Nobody really can. Because if you look at their product, it is really fast and usable and, and it rivals Gmail, which is like a feat in itself. That being said, is that same strength and muscle useful for a calendar product? I don't know. What does a new calendar product look like? And you know, I was definitely one of the fans of Sunrise big time. So I think pretty hard about that. So I actually think superhumans should get their act together.

What about personal CRM? Is anyone going to build a big company in that space? People the product VCs love to say that they wish they had for themselves. But is there enough demand?

I've spent time with founders deeply working on that space.

I haven't seen anyone identify the real pain. And so unless we can Find what the real pain is of. Like, what is the problem a personal CRM really solves for enough people. I think those are niche products. And it could be. You could say that the world's not in a place where that kind of product.

Can be magical enough, where it just tells you what to do and it requires some brain power and there's so many different goals. When you have meetings and stuff and try to keep up with people, that's a little difficult. Like, for example, you'd think there are processes. So I guess the way I. On a high level, the way I'd say it is.

Even today, the CRMs we use, they suck. Like, just the sales CRMs. And that's a very structured, linear process. How can you build a personal CRM without any structure or linear process? I don't know.

I feel like there isn't a universal problem and pain that anyone's figured out how to solve yet. And it might just be too broad of a problem to solve.

What do you think Product Hunt could have done? Let's go back to, you know, earlier.

That's a loaded question, dude.

Yeah. No pressure or if you don't want to.

No, it's not a pressure. It's a loaded question. Yeah. The way I think about it is there was a core value prop of Product Hunt, and it was for a certain type of person, whether it's product people or quite frankly, investors early on, um.

And the value proposition was find new stuff. Just simply, simply put, find new products, whatever they are.

To me, the doubling down of that value prop and core value proposition would have been what I think the company's starting to do now with stacks, which is their sort of. I'm gonna call it a review product. I think the big business there is, like, help people decide what they should use. Whether it's at work or at home. Doesn't matter. Cause, like, it's pretty broad. And I would have went after that, and only that. I wouldn't have gone after anything else. Cause I think that the expansion to a bigger market has to do with people's inability to make a. Not inability. The difficulty of choosing what to use, what to buy. You're talking about like, this thing could have been disruptive to Wirecutter. It could have been disruptive to G2 Crowd, or G2, whatever they're called or, you know, and yeah, you're right. There's many directions. That being said, the launching off point to me was the fact that you had these core group of people trying to find new stuff. They weren't necessarily trying to find new stuff to figure out what to buy or use. They were trying to find new stuff to invest in or find new stuff to get inspired by. Those were the first use cases. But I could easily see that turn into.

Help me decide. That's what I would have explored in hindsight much earlier and not gotten distracted with some of the other things that might not have mattered. I'm not sure if choosing a book mattered. I'm not sure if podcasts mattered. Although we've gotten a lot of traffic from Product Hunt for our podcast.

And I think it really is more about how do I make a decision of what to use, how do I make a decision of what to buy when there's plenty of choices out there, what's right for me type of thing.

Totally. And it was a. It was a nice outcome and Ryan did a great job, no doubt. Yeah. So sometimes just nice to wonder, you know, how could it have been even bigger?

No, no, it's a loaded question. I've got lots of thoughts. As I said, it's loaded, but I.

Meant it in a tribute kind of way.

Of course. Of course.

Similarly, another company that was pretty big outcome, even bigger, LinkedIn. You know, it's interesting because you mentioned daily habit. LinkedIn was a company that got big and for a lot of people it wasn't a daily habit. And just maybe a tribute to the, to the value of the data that they had. The question, I guess is less what they could have done and more.

How.

Can they be disrupted? Or is there going to be a next LinkedIn or is it going to be all sort of niche vertical companies? Or is it going to be some Craigslist that's going to lead to lots of different big companies? Or how do you sort of see that space?

I'm going to go into two things. One is just a statement that's so true. And I think Microsoft is.

Like, I'm super long Microsoft now. They own two of the largest professional networks on the planet. One which is just straight up a professional network with LinkedIn and another with GitHub. And networks are hard to beat. Networks are almost impossible to beat. So you end up having to mostly specialize. Either you specialize on one use case for everybody. So one feature, maybe it's like their experts or recommendations feature of who people are good at. Right. And maybe you build off of that for LinkedIn to attack it. I don't think that's a good attack point because they already have that and they've done a pretty decent job of it. Or you go after just a certain vertical and you know that that vertical and the things you do there either translate over time or that vertical so big. And it's like a nascent part of LinkedIn. So that's one aspect of it. But I don't know whoever made those decisions at Microsoft to buy those networks either. Like it's just like I'm so long on that company compared to some other companies just because they have two of the largest networks on the planet and the most valuable monetizable ones. And so that's one piece and that's all I got there. I think the big thing for me. And on that note, I think GitLab is super impressive because I know you didn't ask about GitHub but like, wow, damn. Such a good differentiated value prop to GitHub. That is a moat indefensible for GitLab. Right. And just right on. Right. In terms of going after it. I kind of feel the same about. I think the company's called mattermost, which is an open source competitor to Slack. Yeah. So there's just obvious play sometimes where it's like you do the more liberal, so to speak, open source type thing against the thing that's not like that. And you can probably build a big business if the pain's big enough. But GitLab network kind of thing is not quite as strong as GitHub, but the use case and on premise and open source and all this stuff. Wow. And I think same possibility around Slack and all that. So that's one thing I'll say and then the second thing, which is I think a bigger.

PETA. And one of the things that's annoyed me the most and made me for years stop building new software. I'm back at it again though is you asked me what was the thing about Product Hunter, what could they have become and done. You're right. Great outcome. Great. Same with LinkedIn. Right. A company's ability to build the right thing fast enough is all that matters. So now you gotta identify the right thing. What I said about both companies is pretty obvious. I mean LinkedIn, I don't have anything to say except they were too slow. They're just too slow. They still are. Right. Product hunt, Same thing. What do you think the issue is? Goes to the E Word engineering, Right. It's like we suck at building software, everybody. And it's like the biggest problem. I think it's the reason it's hard to grow. It's the number one reason we think it's okay to miss ship dates. We think it's okay to not plan what we're gonna build in engineering. We think it's okay to be like, oh, there's three people in a room, we're just gonna crank on this thing. Well, what about when you need 50? What happens? You slow down, you have tech debt. I mean, think about even Slack, right? They had, from what I can tell, 18 month to 24 month refactor and they couldn't ship new features. I don't even need to talk to anyone at Slack to know that. Right. Like, it's just you could see it in the product. Have you used Slack lately? You use it every day?

I use it for work, yeah.

I'm sort of speechless at the degradation of reliability even though they refactored it. And I'm pretty sure that it's virtually impossible to fix that now. If you think about it, same problem LinkedIn has, you know how slow that product is. Slow, right? Well, it was built at a time when like, I don't remember. I think it was Java. Right? Like, I get it, but crap, we suck at this because these things are slow. And now people have different expectations. So the fastest, most important thing you can do is figure out what it is you can't what it is to get. Right. And so I think Slack got a bunch of stuff right and it's going to continue to grow. Yeah, but imagine if is where my head is. Imagine if we were just better at building software.

And are you excited about companies that are trying to make it easier for us to build better software?

I don't know if any company really is. I don't know if it's a company thing or a cultural and process thing. And us getting past a bunch of limited belief, limiting beliefs, like the limiting belief of like nothing ships on time. Well, that sucks. Why would you. What? Like that's like saying like, Come on. Like that's like saying like, like my package won't be delivered when Amazon tells me it's going to be. They already figured that. I understand engineering is more complex supposedly, but here you're moving like physical items around across planes and ships and stuff like that. Really? So I don't know what we're doing wrong. Yes, I'm excited about everything that comes out that proposes to help, but we're still in this sad state.

Do you think no code is only growing and here to stay and can it change the way we build companies?

I feel like there are a lot of people that are really excited about it. And a lot of people get excited about new shiny things and there is a ton of value in most of these new shiny things. But just like growth, hacking and lean startup, does no code just become.

A way of things? I actually think Zapier is probably one of the most interesting and game changing businesses that we still barely label as no code. And there's a lot of offshoots of it that are in the automation space and things like that. But ultimately at the end of the day, yeah, I think it's great. I think it's great that people are talking about it. I would love to see more and more information out there on what's actually possible at no code and the sort of. And there's stuff out there, right? Like there's enough stuff out there. But like I'd love to see the contrast of here's what it would take with code, here's what it would. Here's what we can do, here's what we can do with the stitching the stuff together with no code. And those contrasts I think are what is missing out there. It's not just the case studies of like here's how to do X with no code, but it's like really hammering people's heads. If no code is to grow and become a thing, more of a thing and become ubiquitous, it's like what's the difference? How much faster can you do something? Because that saves time and money and resources and headcount and all that stuff. There's not enough of that out there. So I guess the thing I would complain about there is if that movement is going to move forward in a way that's meaningful, we need to start knowing the difference between code and no code. If that really is the value prop.

Yeah. And how should we think about that difference?

Time and money? How is this cheaper and faster? That's it. That's what no code whole proposition is. And I don't see enough noise, enough knowledge, enough case studies, enough about the difference. Not just you can do it with no code. What's really the difference? Because that's when you start seeing larger and larger organizations start paying attention to it because they can save money.

A couple things. One is, I was recommended to ask you if you're open to sharing the story about intercom versus drift and any, any lessons there. I guess I have the broad question and if you don't mention that example, that's fine. A broad question of how startups should think about competition when, when it starts to get interesting. Because maybe day zero don't worry about competition.

But I think what you're looking for when you compete is another company's blind spot. And I think Drift brilliantly identified Intercom's blind spot by starting embarrassingly, hey, you're just an Intercom copy. You're just an Intercom copy. You're just an Intercom copy. Oh, wait, Intercom started copying you now. So I would say that the execution there was brilliant in finding an opportunity that's like a gap that another company just couldn't see until they could. So the fact that Intercom had to copy Drift was the evidence that Drift got onto something while in the beginning Drift copied Intercom. So I think it's like kudos to the Drift team for being strategic. Kudos to Intercom for giving up on some of their public beliefs to copy Drift because they had to give up on some public beliefs they had about humans chatting and things like that in order for them to be able to kind of imitate or copy Drift or whatever. And they did copy Drift. Like this is factual. As much as they might say they didn't. They did. It's factual. Right?

Which part?

Focusing on sales and building out sales automation and sales bots and stuff like that. I don't. I think the boulder move would be like, yeah, we've got conversational marketing too. But they haven't done that yet from what I can see, because they definitely have the ability to put a message out in the market in a way that Drift now does too. So I think competition is really interesting. And there are some people like David Cantle at Drift and the team over there that are able to find an opportunity and really capitalize on it that someone else should be doing. Yeah, that's what they've been very good at historically. And it's a DNA thing, so it's a little bit of a unique story. But the lesson there for me is like, if you're gonna go enter a market, figure out how to re segment it and it's okay to look like a copy until you figure out what it is. As long as you're conscious that, like, look, I want to enter that market, we're going to enter that market and we're going to go use.

Use what we enter into and what we build and the usage. We get to learn what the actual differentiated opportunity is. So for all intents and purposes, I think the folks at Drift found a differentiated opportunity using a discovery process by copying a competitor or seemingly copying a competitor. Because I don't actually think those products compete. They only started Competing. They competed early on, supposedly, and then they stopped competing because Intercom just couldn't do what Drift could. And now they're competing again because Intercom added that feature in. Intercom has a platform and a system to be able to add more use cases to their product, which I think is a brilliant business case in itself that should be written one day.

That being said, I think Drift got closer to the revenue and closer to the money inside of companies faster.

Is there another or any other examples that you think should be written into case studies one day?

It remains to be seen, but I think Superhuman is a good case. A case of finding a behavior and doubling down on that behavior inside your product. So a lot of people tout Superhuman for the speed. I would say that that company's gotten really good at teaching people shortcuts while no one else has done that. Gmail never taught me shortcuts the way that Superhuman does. And that's from my perspective. And I've done some tweets on this a while ago to just see if I'm right. Basically, I asked if anyone has used Superhuman, quit and gotten better with Gmail. After they quit, most people said yes. And my thesis was, is because of shortcuts. So there's almost like a gap there that they discovered. Now the question is, what do they do with that gap? Do they do what Drift did and build a massive business out by widening that gap and, like, doing what's next? Hence my whole call to arms around Calendar, which I'm sure they're working on. I mean, they have to be right. Or do they just flail? Because, like, they didn't double down on that uniqueness or what they figured out? We don't know. But I think that's a very interesting case. And then now when you think of the case of, like, Superhuman for X, which we'll see.

I know there's a lot of plays out there like Superhuman for X. And I have my own.

Issues with analogies like that at the end of the day, because, like, what does that really mean? Does that apply to every market? How that's a case itself, that's another one that I'm pretty, like, curious about.

It didn't really work for Uber for X.

No, it didn't. That's right.

A lot of companies that didn't work out.

There you go.

So how do you think about the legacy between, you know, kissmetrics, Mixpanel, Intercom? How do you sort of think about the legacy of these kinds of. These kinds of businesses and how they've evolved. Like could you have foreseen in 2000, you know, whenever that it would have evolved this way?

Yeah, we had prototypes at kissmetrics of Intercom built into analytics because we thought that was right before Intercom existed. We had prototypes and so mock ups and research around what Heap analytics has done, which is like automated tracking.

Back to like that engineering thing I said and all that. I think we screwed up because we didn't know how to execute. We didn't know how to capitalize the business. And I think that when you're inventive like that, it can be a struggle to actually execute. And so I tend to try not to be as. Try not to be too smart for my own good and come up with more and more ideas and instead double down on the core. You know, back to even the thesis on product hunter around like what could have happened? I think there's a doubling down on core that I would recommend most companies do faster so that they can get to the more expansive opportunities. It's like unless your core is strong, there's no reason to double down. That would be the kind of the thesis I have. So what we can learn from the amplitudes, KISS metrics, Intercom, et cetera is like I don't think actually Intercom has done a poor job of most things. I think they've done a great job, they're a great business and they were bound to get sliced up by other folks. And they are not just drift. There's a lot of other folks going after it. I think the only thing Intercom's done that they could have done better is they could have kept the love of startups that they used to have. That'd be my only criticism there. There's too many people that are really irritated by their price hikes. That being said, like maybe it's a Salesforce strategy where you just stop caring about that market. That being said, when Salesforce stopped caring about the low end market, there was really no low end market to make enough money on. I think there is now. And so you're letting a lot of companies take your revenue if you don't make the bottom end happy fast enough these days, especially if you started there. Intercom used to be loved by startups. Now all I hear is dissatisfaction. Not hate, but dissatisfaction.

We talk about lean startup, we're talking about iterated approach. K. Keith Raboy usually likes to use Apple as a counterexample.

Is Apple also doing lean startup? And how do you think about the approach of Reid Hoffman if you haven't shipped fast enough, then the quote, you're embarrassed. If you're not embarrassed by your product you haven't shipped fast enough versus the Apple approach of hey, shipment is perfect.

I don't know if anybody knows anything enough about how some of these other companies operate to be able to speak to it the way that some people try to. That being said, like, I'm a huge fan of what Keith has said recently around forging product market fit and I don't think these things are mutually exclusive.

Right? Say, say more about this.

Well, he talks about forging product market fit. It's really gotten stuck in my head. I'm not sure. If you iterate into product market fit, I think you have to have a really strong conviction and ideology about where the, where the world is going and what you need to build for it. And if you don't have that, then like you're going to iterate your way into probably nothingness or samesies like someone else. And then you're just relying on better marketing or some better sales or something to keep the business going. But that means that you don't necessarily have strong enough product market fit in the market. So like this idea of forging it.

Is really appealing to me. And so if I were to get to ask him something, I'd be like, what the heck do you mean by that? Tell me everything. Because.

I don't think it's mutually exclusive to iteration or shipping and being embarrassed at the same time. I feel like it hits on the idea of you have to have a vision, you have to have some idea of where things are going to go. And you might not have it on day one, but you need to have it as soon as possible because then you're driving towards it. You're actually driving towards it. You're not just sitting there iterating towards it.

So give me and the team at Ondeck that's working on Cosine some advice incubating this company. I've talked a little bit about it on podcast where basically it's sort of like. And I've sent emails to you and you've been helpful about. It's like a professional network based on who you vouch for and who vouches for you. And so it's trying to sort of do a couple things. One is unbundle LinkedIn endorsements, but done really, really well. So there's three categories. People who have shaped your career, people who you'd work with anywhere, or people who you think are rising stars. And I guess my two things I mentioned. One, LinkedIn endorsements, two sort of peer to peer credentials. Right now we pay Harvard, Stanford, whatever quarter million dollars, a lot of money to get a piece of paper that says I'm awesome. But Heaton, if I asked you, who are five people who you think are up and coming of that age group and that you've spent some time with that you think are likely to be successful, I would actually value that more than a Harvard degree. But I know you. I don't know who those people are. Most people don't know who those people are. And so I think that's value left, left on the table. So a couple questions for you. One is, there's a couple of big. One is if you were, if you were able to build that network and get that data, it's somewhat of like a glass door for people, but only in a positive sense and you know, targeted for work.

How do you build a business off that data? And then to the challenge, of course of getting that data and because you can, you know, we have 5,000 cosines that just emailing people is sort of a give to get. But it's really not going to scale unless you have sort of a viral, you know, unless the people who get cosigned want to cosign others and you sort of have, you know, outside of our network. How do you react to that? What's your, what's your advice for us?

The, the word leaderboard comes in my head. I think that's a type of business, that.

Social pressure, social proof. All those aspects are what I experiment with building it. So it's almost like convince me that if I do this thing.

I can be a winner. Yeah, that's really what it boils down to. I can be the first one to vouch for this person. Right. Like things like that I think end up driving that business. And then you almost all of a sudden have a profile of. I know this is the aim, like roughly speaking, but have a profile of who vouches for whom. Yeah, right. And make me feel great about that. So I think there's tons of public pages to build out around that idea. I think it's inherently has a strong potential to be viral, so to speak, but the core of it is just people vouching for each other.

Yeah.

And I think some of the things you mentioned around it might make it too complicated.

Yeah.

So it's like just who cares? Like they're up and who cares about the categories. Yeah, like that's my, in my mind totally. I just Want to vouch for someone? Yeah. So it's almost like I vouch then you make me categorize.

Right.

Instead of like I categorize. Yeah. And then. Or the categories and then under them. So to me it's more about I vouch and then you make me categorize is kind of what's in my mind. Because like, yeah, there are people I'd vouch for. You can give me ideas. But like I feel like when I'm forced to, like, I mean it's kind of interesting. Like it's one where I'd experiment with both models and see like, like what emails get the highest click through rate and opt in rates. I think it's an interesting idea. And then to your point about monetization, there are some ideas and some things where it's like, you know, the data is so valuable and the information's so valuable that like it's an experiment. You build it in a capital efficient way until you have enough data and you have hypotheses around how that data is valuable. You can start testing those early before you have the data to make sure you're directionally correct. Like, who would pay for that? Who would buy it? Like is it companies? Is it part of a recruiting process? What is it and what can you build on the back end of that? But it's a data play and so a data play is like in parallel, like go get the data and in parallel go make sure that the data is going to be valuable.

Totally.

And some, some of them are not super obvious. Like this one's not super obvious as to who he'll be valuable for. I think there are some ideas and so it would be a parallel effort in my mind.

Yeah, super, super helpful.

I want to, I don't know anything though. Yeah. Always caveat that with whatever I say.

Totally. I appreciate it.

Those are my off the cuff thoughts.

Yes, I appreciate the question of close on is sort of a big question, but add some nuance to, to the controversy. In the last year there's been sort of this DHH basically has sort of been on the other side of this, the debate on do you raise money? Do you not raise money? Sort of bootstrap versus VC. There was of course the 80 hour workweek debate that keeps rearing its head. It feels like there's this sort of real tension. Add some nuance to this. Obviously it's sort of, it depends but, but what's going on there? Why is that such a greater tension? And two years from now, are we still having These same debates, do they get worse? Have we reconciled? How do you think about this?

Who cares? Just honestly, like, who cares? Just who cares? This is why I'm actually mostly off Twitter. Unless I have something really insightful to say or that's just, I need to get out. I have nothing to say because like, who cares? Like the more I read that stuff, the more I'm like, I don't care. There's times in my life where I worked super hard. There's times where I didn't. In my case, like I've ran a self funded and a venture funded business. Like who cares? Like, it's like, you know, the bottom line is know what you're getting into.

Yeah.

And I think like the bigger point on all those debates, work hard, not work hard, venture, not venture. It's like, just know what you're getting into. And the world is full of way more opportunity than ever before around self funding, bootstrapping or whatever. And also on venture funding and raising money. It's just like, know what you're getting into. Sure, if you get into the treadmill, if you're, if you're into, call it a treadmill. But like if you're into the.

If you're, if you think you should, you want to raise money, then make sure you know what you're getting into. For example, if I'm gonna go raise money for a business of mine, I'm going to know that I need to raise money every 12 months. I also need to know that like it's not venture capital, it's risk capital. And you know, the people on the other side are invested in a number of things and they know that their hit rate is 10% or 20% or 5% or 1% or whatever it may be. Right. But it's not 100%. And for me, this is the only thing I'm working on. So for me it's 100%. So knowing that I might not make it and the chances and everything is against me on making it. So to speak to the other side, and the other side looks like an exit, a billion dollar business IPO or something, I just know I'm getting into that and I'm okay with it if I'm getting into that. And I would advise everybody to know that even when they get into yc, they should know that this is a game you're getting into. Know the game you're playing in life. This is the game of business that you're getting into. And if you're going to sell fun, know what that looks like. Right? That's it. And it's just like, I really admire everybody that's speaking up on both sides. I think Twitter has made it so that we're just feeding our egos.

Yeah.

Instead, like, objectively speaking, just know what you're getting into and if you need to read Dhh's statements about it, go for it. But please, like, know that he's angry. Yeah. Like, I don't care what he says. He's angry. Angry. I don't know why he's so angry. I want to know what made him so angry. But he is angry. He comes across as an angry person. And honestly, he has done more for software than almost anybody else personally with Ruby on Rails, gotta say. And why is he so angry? Like, why is he so angry? Yeah. And he makes everyone else angry. They fight him. And like, it's like, it almost reminds me of a little more aggressive back in the day, Jason Calcanis, who's not as angry anymore. It seems like he's calm down, he's at peace, has a child, et cetera, like, whatever. Right. Maybe two, I don't know. And like, wow. But th is still angry. And it's like, dude, like, why are you so angry? If I got on a podcast, I'd be like, yo, I don't care about. Your opinions are great. I respect you madly for what you've built, but why are you so angry? Because, like, you're angry.

Yeah. Well, he has a podcast and there's a call out. You should invite Heat in and have a. Have a great chat.

I just want to know why he's angry. It's going to be personal.

Yeah, totally. My guest today has been Heaton Shah. Heaton. Any. Any last plugs or words of wisdom. We said know. Know what you're getting into. But for people who want to learn more about FYI and what you're. What you're up to right now.

Yeah, we're at. Use FYI.com Sign up. Check it out. I'm at. At hnshaw on Twitter Hnshah, but I don't really tweet as much as I used to last year. And lastly, I'm going to leave you with this, which is like, just remember, nobody knows what they're doing.

Heat, thanks so much for coming on the podcast.

Thanks for having me.

If you're an early stage entrepreneur, we'd love to hear from you. Please hit us up at VillageGlobal VC network, Catalyst.

SA.