The art of finding startup ideas that work | w/ Rob Snyder

All right. Well, hey Rob, here we go. Round, round 5. At this point, blues bruised, bloody, hanging in there.

Got another cease and desist this time from YouTube headquarters.

They preemptively demonetized this even though, yeah, there is literally a fraction of a fraction of a penny. And they said it's, it's about the principle of the matter that we're, we're clawing that back.

I know we allow literally any content on here, but you DORS just is so bad. We have to, we have to take a stand here.

Yeah. They recently came out with, so we're not allowing monetization of AI and an asterisk, like also the piece of garbage that is Arcee and Rob talking to each other.

Yeah, exactly. This may not, this cannot stand.

Hey, I've been thinking about our conversation last week and there's something we, did not address, which is you can put 5 pounds on the bar every week, but if you get food poisoning, that's just going to like push you back a number of months.

So yeah. Yeah. Turns out though, I lost, you know, like 5 pounds in the last 24 hours. And so I've never been looking better. But yeah, the combination of food poisoning, it is currently like 9,000 degrees here and I just ate a thing of yogurt. Is gonna make for an interesting conversation. I don't know, I don't know what's gonna happen, but, uh, let's play it.

When was the last time, for, for our audience member, that you listened to a podcast that had an emergency bathroom break, like, in the, in the middle of, uh, of the recording? Uh, we'll see if we go there. Um, but on, you know, on that, so our last conversation was about how to Reach PMF, basically. It was, you know, sell, you know, try to deliver. If there's something that's wrong, debug it. And I was, I was thinking about like why that's hard. Like it just seems so obvious. And the thing that I, that was coming to me over the weekend was like, it's hard because you don't know what are the fundamentals to be doing. And there's so many people out there that are telling you like, these are the necessary steps. And particularly when you're getting started or when it's your first time, you just don't know who to listen to. And like your choice of who to take advice from is really, really important. And unfortunately, parts of that are really difficult to know. So hopefully that's something that like your writing, that, that this conversation or these conversations help to demystify or at least provide a North Star for what are the types of things that people who actually know what they're talking about are saying and telling, telling founders to do. Yeah.

Yeah. I think that's like, I found that to be super hard too, which is that like you can find people who are right about some small thing, but when you zoom out, it doesn't actually make sense at kind of like some more fundamental level. And so that's what I've been kind of like struggling with all these years is if you don't, understand everything, you kind of don't understand anything. And so how do you build this kind of fundamental understanding of why does a startup work? When does a startup work? What causes that to happen? And you wind up asking some super basic questions. And when you ask those really basic questions and get down to kind of like the source code here, it's, it's interesting because a lot of things that you are told to do turn into things that like make no sense to do. And I think we're going to hit a couple of those today. Things like discovery interviews and design partners. I am, uh, I'm ready, ready to rage.

I love, I think this, this might be my favorite thing that you've written, um, or it's certainly among them. I think you, I think there's like a level of lucidity in it that I found very, very refreshing. So I can't wait to dig in. Um, the post is called Where to Find Ideas. Why don't we, why don't we go ahead and set the stage on this one? Like we've talked about, you know, with the toll booths, we talked about post-PMF. Last week we were talking about kind of like looking for PMF. We're actually kind of going a step earlier at this point. Or I, you actually say that we can be at a few, a few stages. It could be super early. It could actually be launching new products. Why don't you talk like, help us understand where, where's our point of departure here?

Yeah. So this, this is about where do ideas come from? And those ideas can be your kind of foundational startup idea, or it can be an idea for a feature, or it can be an idea for a go-to-market tactic. It can be an idea for a variety of things. And so this can happen at any stage. And if you recall, like the whole point of what we're doing here is we're trying to construct a, a theory for how do startups work? When do startups work? Why do startups work? And so this is a really important part of the theory in terms of like, where do ideas come from? There's a lot of things that are, you know, how do you go and get startup ideas or how do you prioritize feature requests or how do you do all this kind of stuff? And what I found is we don't really know what we're looking for when we're looking for an idea. We tend to look for the wrong things in the wrong places, find the wrong things, and then hit our heads against the wall for a while. And so this is a question that kind of attacks at multiple different places. But the core, the core point that I wrote this, this post around is where do you actually get your startup idea from?

Yeah, which hard to imagine a more relevant question. I feel like half of our classmates at business school were like, I came to business school in order to think through what's the startup that I want to start. I mean, you were a little bit in that camp when we were, we were getting started. So what's the Like, what's the point of departure here for— how do people— how do you see founders thinking about, um, uh, like what to point their business at or where to, where to start to look for their idea?

Yeah, so I mean, I could talk through all the different things that I did that were all kind of different versions of stupid, but like the canonical one is, you know, you're right on a whiteboard, you find a whiteboard, you write on it like what are the big trends that are happening, and you got to throw AI agents, maybe toss a blockchain on there, see what happens. And then on the other side of the thing, you write like, who could we, like, what could we possibly sell to who? And so the shape of the ideas just come out of like this brainstorming where you are sitting in a room and saying, you know, what if we did Vercel for MCPs? What if we did this for that? What if we did Uber for blah, blah, blah, blah, blah, right? And, and you try to kind of match that with trends and say, this could be big, right? And, and that's where ideas often come from. Or if you go a step further from that, you go and you're told to like get out of the building and go interview customers. And so you just do a bunch of customer interviews and yeah, you, you are in theory supposed to learn from those interviews. What are some good ideas? What are people's pain points and problems and da da da da da. And then you come back and you create a spreadsheet of everyone's pain points and problems and you rank them and you say, oh, this one's a 9 out of 10, let's go after this one. And so, yeah, there's a couple different methods there, but they all kind of come back to like, I don't know, either find pain points or problems in customers or just come up with random ideas on a whiteboard.

Yeah. And so you break down this approach into 3 pieces. We've got what are we looking for? Where do we find it? And how do we know we're right? So that some of the things you just mentioned, pain points, you mentioned a couple others, people who want a product, people who would benefit from a product, which is maybe my favorite out of those. And then an underserved market niche. Let's, let's like, why are those wrong? Like they kind of sound right. I mean, eventually. A successful product does serve an under— or it does serve an underserved market niche. It does serve, uh, you know, customers that benefit from the product. So like, why doesn't it work when you're going in, in the other direction?

Yeah, this is the— like, this is the most interesting thing, I think, in here. There are other pieces, but the most interesting thing to me is that when we're looking for ideas, it's not actually clear what are we looking for. What we typically think we are looking for with ideas is something that's like a new kind of accounting software, right? That is what an idea seems like. It's like a product idea. And yeah, that's like not unhelpful or AI for accounting, right? Or whatever, like things like that. Those are kind of product ideas. Then, but you know, we look at that and we're like, okay, who the hell wants that? And that's when we get into like, what are we actually looking for? We're looking for, I guess, demand or people who want our product or pain points or problems. There's a list of things that we kind of like think through there. And most of them I have found are directionally right, but actually wrong and lead us in the wrong direction. Like, yes, obviously we're looking for people who have pain points and problems, but pain points and problems are not enough because people can suffer for, for years. Like, life is just a series of pain points that we mostly do nothing about. And so if you find a pain point, the point is, if you find a pain point, that doesn't necessarily mean you've found demand. You've found somebody who will buy your product. They might just look at this and say, yeah, that totally resonates with my pain points, and then get back to work, and you're there scratching your head. Same with people who want your product. Like we, you know, the Y Combinator motto is you should make something people want. And like, has anybody ever wanted an ERP? I'm pretty sure nobody has ever said like, you know what it is, it is Wednesday and today it's a hot Wednesday in July and I am really hankering a new ERP module. Like, Like, is that, that's so, so, but that what, if you're looking for people who want your software, you're just not gonna find it. Yeah. And then, and then like the last one I'll, I'll tinker on is like people who would benefit from our product, like especially us idiot MBAs, right? Like we can go out there and create a super compelling ROI case. And I've done this a bunch of times and been like, you know, you come up with these like platitudes in your brain. People only buy things to increase revenues or decrease costs, right? And you're like, yeah, nailed it. Snap my suspenders. Let me go and sell this. And then you go and you're in front of somebody and you're like, I can increase your revenues by 20%. And they're like, cool, shut up. And then you realize, and you, and what you, what you realize is that there's a lot of people who could and would benefit from our product, but that doesn't mean they have demand. We need to look for people who have demand. And so we can get to like what that actually means. But those are the kind of common patterns of things we look for and can find sometimes. But that doesn't mean people will buy.

You're my second favorite Mungerism or equivalent to Snyderism. But number one continues to be, it would be weird if like that. I think that framing is really popular. But the other one that you just brought up is life is a series of pain points that people mostly do nothing about. And the combination of that and I have this thing that is in your best interest that if only like you understood that, like there's no telling how much time founders spend like frustrated, like legitimately being like, how do I get these dingoes to realize that I'm doing the thing that is the right thing for their business. And it's like kind of paternalistic, that particular way of thinking. But more importantly, it's just not effective. Like that just does not— it's impossible to actually understand, you know, exactly how it's going to fit into their environment upfront. And the, you know, people are looking at you like, this isn't— I see the numbers, but I don't believe them. Like it just doesn't work.

Or even they're like, you know, what I find is a lot of people who try to sell like all-in-one platforms for verticals. So like like say you have the CRM for motorcycle repair shops or whatever, and you can like show them and be like, listen, all your stuff's on paper today and it seems really efficient, but inefficient. And they're like, yeah, it's totally inefficient. Isn't this software platform so much better? Wouldn't your life be so much better? Yeah, it'd be so much better. Do you want to buy it? Yeah, not really. Like, and so what is, it's kind of like we're trying to force-feed people. We're trying to foie gras them. Are broccoli and they don't want it.

And I've never heard foie gras used as a verb. I tried that. For anybody that's maybe not familiar with that, it's the process of overfeeding geese in order to make their livers larger. But anyways, so we're trying to, we're trying to do the equivalent to customers.

And unfortunately, PETA is out in front now calling for my head.

Holy Although, to be fair, in this context you were saying do not foie gras them.

True.

True. Yeah, so Peter, Peter can hold on for a second.

Yeah, that's true. So anyway, okay, so given all that, those are the wrong things to look for. What are we actually looking for? What we're looking for is demand, which is not super well articulated, which is why I came up with this concept of the pull framework, which is Instead of looking for kind of static problems and pain points, we are looking for the actions people are actually trying to take, the, their priorities. And specifically, we're looking for a priority that they are trying to act on, but are blocked. And their existing options for acting on that priority are not good enough, such that when we offer what, like, our option, what we're building, They pull the product out of our hands. And so that's where the pull framework comes in. There's 4 different criteria. There's a project. There's why it's unavoidable, why they can't not do this project right now. Then there's what options they look into and why those options have serious limitations and are like, can't get them there. And when you find like what you're, what we're looking for are those 4 things. Yeah, there it is. What we're looking for are these 4 things. A person in this situation. This is product agnostic. This is not about our product. It is about somebody trying to accomplish something who is blocked. And we're looking for this and to figure out what is the shape of this such that our product is relevant.

Yeah, let's, let's dive in. I think this framework is incredibly powerful. Uh, every element of it, there's some pieces that I find that are like, were very not intuitive to me. Um, you know, one is that it's project-led rather like their project-led rather than your product-led, which is how you you've reframed demand versus supply. I don't know if there's— do you want to talk? Is there anything more to say on that one that you want to go deep into?

Just think about like, given what is on most people's to-do list, it would be weird if they bought your product. But some people, given what's on their to-do list, it would be weird if they didn't buy your product, which means we have to focus on their to-do list. The things they're trying to accomplish and the things they have prioritized. Only when they have prioritized or are trying to prioritize something does our product become relevant. So their project is upstream of our product.

I really like that. And it ties into the unavoidable, like on the to-do list, like the thing that is unavoidable. That's a piece that I— it's why the this gives you a 20% revenue, you know, return does not work because none of those, like, those types of pitches truly address like this unavoidability of it. Like, nobody wants to buy something. Start with that assumption. What do they have to buy or what do they have to do in order to solve it?

And it's often like a situation where they have to buy it, where they can't not prioritize this. Like, for example, if you ship buggy software and like customers start complaining, you probably have— you almost certainly can't not address that. You almost certainly have to solve QA in some way, shape, or form at that point. At that point, it would be weird if you didn't. That project is unavoidable then when 3 days ago it wasn't.

Yep, totally, totally. And the options one, you know, what are they looking into? Is that important because it's an indicator that something is already unavoidable? Or like, why is it important that they're already looking?

Yeah, so it could be that they have tried things previously for it, or it could just be that they, like, when they're gonna do something, when they have a project on their to-do list, they often consider different paths, and that is what we're competing against. So we need to know what we're competing against. And it usually isn't hip other YC company. It's usually, well, I could just hire somebody and give them this responsibility, or we could outsource it, or we could, I don't know, there's a variety of different, we could use the software we've already bought for this. Right. And so what we have to understand is what are they like, what are the actual options they're considering and why are those options not good enough? Somebody could have an unavoidable project., but have a good enough option for it, right? That it could be good enough to just hire somebody, in which case there really isn't a place for us to win there.

And the kind of status quo option of just do nothing or, you know, continue on, on current trajectory with, you know, non-technical, non-technical solution. Um, uh, and then lacking, what is it? So it's, you know, basically you want to find a, a, a project that's unavoidable where the options like really just are not addressing the most important thing for this person. What does that look like in, in real life? What kinds of things are they saying when, when their options are insufficient?

Yeah. So it's often like, you can often tell this when they've tried something and churned off of it. Right. And so it's like, yeah, we, we hired an assistant to do this, but we wound up firing or we hired this kind of role to, to manage this kind of thing, but they couldn't do it and they turned over. And so we're constantly trying to hire somebody for this role and it just doesn't. It's like not working. What that tells me when somebody's hired for a role and it hasn't, hasn't worked out, there's like a lot of turnover or they just can't get the job done is like, Okay. One, they're willing to spend a lot of money if they're willing to hire somebody. And two, that option doesn't work. And they're like, they've kind of tried that enough times that it's like, we should be able to show up in that situation with a not very good piece of software, not a very good product. And they'll say, you know what, screw it. Might as well give it a try. I don't care.

Yeah. I like what you write in the blog. And when we find this thing, we find someone who will rip a janky product out out of our hands when most people would rightly not use it even if we paid them to. Like, that's, that's just such a distinct, uh, succinct capture of what it's like when you actually have demand versus what it's like when you don't have demand, which is, you know, the, the root cause of all this.

Yeah. And, and like, for any product, right? Like, I know the objections that are in people's heads when they read that, which is, our, but our situation is different because blank, right? And No, it's not. And the specific thing is our ideal customer is the one who has such intense pull that they will rip the janky version of the product out of our hands. Now, that won't scale to your $10 million ARR, but that's the point, is you're looking for the, like, white-hot center of demand. The like pool of such intense demand that people are totally okay with a kind of subpar product experience, with an early product experience, or with something that is a mix of product and human, uh, because they have such intense pull. That is what the early stage is about. It's about finding that white-hot center of demand. And what most people think is it's about convincing a bunch of people who have lukewarm or no demand that they should try our product. And that leads to all the downstream, like, oh, we need to hire 40 developers. Oh, we need to, we need to have a perfect product before shipping. It's like, no, we have to find the person who desperately needs help.

Yeah, totally. Totally. Do we, do we want to jump in here, Rob, into the Venmo example that you've, you've got in the blog?

Yeah, we've, we've talked about that and, and, uh, or I guess we haven't talked about it, but it's, it was an earlier blog post here, which is This was from Plaid, the company Plaid, which if you've ever kind of like used anything to connect your bank account, you've used Plaid because Plaid connects to bank accounts. And so their early customer was Venmo when they kind of went through a pivot to be a B2B product. And Venmo was trying to connect to basically every bank on earth so that you can then send money to your friends on Venmo., and they did not want to have to build out all of those bank integrations themselves, but they were growing really fast and needed all of these bank integrations. And so their only other option was to do it themselves. And so, right, like they don't want to do it themselves. Plaid shows up and says, listen, we could build all this for you. It's going to be kind of hacky in the beginning. And Venmo says, yeah, cool, no worries, let's do it, and rips it out of their hands. And early fintechs also did the same. And over time, Plaid expanded to like broader banking industry who had much significant, like much higher requirements. But by that point, they had already kind of like nailed the people who were desperate.

Yeah. Yeah. And, you know, it's kind of a— remind me, what was, what was Plaid doing originally before they—

Yeah, they were doing like budgeting apps for consumers.

That's right. Yeah. Yeah. And just found like Turns out people are pretty okay with, with just continuing to live their life the way that they currently are, which is, you know, financially kind of blind a little bit, unfortunately. And then like this, that's a pretty hard pivot. Like, does this— is this a case in which a pivot makes sense when you do find like that strong of a demand signal?

Yeah, of course. Of course. Like what you find is like I, I would benefit a lot from actually managing my money. Am I going to do it? No. So like what you— what they found was that a lot of people are like me, which is it's all in a checking account. Right. Great. Cool. And yes, I can admit to you right now that I should probably do something about that. I have admitted to everybody in my family who has told me to do something about it that I probably should do something about it, but I'm not going to change. And then they found Venmo, who was like, listen, Yeah, your consumer apps kind of suck, but we like actually need this and some of the infrastructure you built for your consumer app actually would very much benefit— like we desperately need that.

Yeah, desperately. Like that's another good word for like the unavoidability of that particular project. Well, why don't we jump into where do you find it? So you, you mentioned, yeah, here we go. If you, do we want to do like some stretches as you like, make sure you don't like pull a muscle as you're ripping into like why discovery interviews are a waste of time, but why don't we start with like, how do people typically start with looking for, for demand?

Yeah. So, so one way is they just don't, right? We just like build the product and then eventually try to sell it. The, the, which is bad for a lot of reasons. And so people, like a bunch of people came along, well-intentioned people came along and said, hey, at least interview a few customers first. Right. And it's like, you, the, the thought is that you do discovery interviews that are open-ended interviews that are not about your product, but they're about their lives and stuff like that. And from those interviews, you should be able to find something, pain points, problems, desire for your product, right? We, go back to point one earlier, which is you don't actually know what you're looking for. And, and so that's kind of what I was taught is the gold standard are to do 20 discovery interviews or 100 discovery interviews or 1,000 discovery interviews. And like, that's what you're told to do. And I did them and everyone's done them. And unless you are like Bob Moesta, the creator of Jobs to Be Done, who can see into your soul in a discovery— I've watched him do a discovery interview before and He's, he makes me look like a kindergartner, like in terms of how he does it. And so yeah, there are a couple of people like that who can do exceptional discovery interviews. For everyone else, it is the height of arrogance to say, I don't really know this industry, but I want to build a game-changing product. Or I know this industry somewhat, I want to build a game-changing product. And you know what I'm going to do? I can get all of the information I need by having 30-minute open-ended conversations with potential customers. And like, yeah, that's, I can figure it out from that. Like, if you frame it that way, these discovery interviews are just arrogant. It is insane to think that from just discovery interviews, you can actually figure out what people want. It's, the other part of it is, like, it's not serious. Ask yourself, if your life depended on the outcome, would you just do discovery interviews? Of course you wouldn't. You would go firsthand. You would do the work yourself. You would work alongside. You would work in the end. You would like go to where people are actually doing work, get your hands dirty and figure it out that way.

Yeah. You talk about a couple examples of that in the blog. There's I think you and I in a previous conversation mentioned the HBS grad who went and became an EMT and like did that for 6 months. You talk about like somebody that was designing for greenhouses and bought a greenhouse, which, like, you know, that's a decision to get into a business financially in order to understand the problems because you think that there's a solution there. You know, I think a lot of this comes down, thinking about is like, some people want to be founders. I'm not— this is not said judgmentally. They want to be founders in order to be a founder. And, and so it doesn't actually— like, the, their product that they eventually design, or the way that they approach it, comes out of a desire for a job that they want to have, or they want to do, rather than an understanding of what customers want, which is kind of by definition approaching, you know, the development or looking for demand from supply first, which is I want to offer my time and my ability to lead and my ability to design to customers.

Yeah. Yeah. I think, I think that's, I do think this just comes out of this kind of LARPing founder mode, which is this set of practices that we've all somehow allowed to seep into the entrepreneurial community. You know, things like startup pitch competitions, which I could rant about for, for days. But there's this set of things that are playing founder and not actually building a company. And I think like discovery interviews are in the uncanny valley between, right, between total LARPing and actually being productive. And so that, that's one of the ones that I just kind of like, there's a lot of things in that uncanny valley that are things that feel productive, but actually generally aren't. And there's a much more direct way to get the answer that you're looking for. Um, and so, yeah, I mean, we'll put Design Partners in that category in a second, But the problem is that there's so much noise out there that is in the playing founder realm or the kind of valley towards being productive that we don't, that the obvious thing, which we just talked about, right? It's, it would be weird if you could build the right product by only through interviews. It's just, that's just a strange thing to assume.

And it feels like there's two pieces to this. Like one is like, go do the thing, like real, like become your customer, which I think is a brilliant way of putting that, that you articulated. And then another one is eventually sell. Like, and it feels like neither of those are discovery interviews. You learn things from both of them, but it, you know, in order to have the thing to sell, you need to be like intimately acquainted with, you know, with the, with the pull, with the demand that's going on there. And then it's unavoidable, like before you feel like you have a product that is ready, start selling to, you know, develop the ability to connect with that demand, to better understand the demand and to, you know, guide the product toward that.

Yeah. And I just had a thought now, which is that most of the advice out there seems to be designed to make you feel comfortable, not to make you successful. Yeah.

Discovery interviews, you feel good about them afterward. Like the person might even thank you when you're, when you finish the interview, it's like, wow. Yeah. I hadn't thought of, you know, that, that was, that's a, that was a great conversation. I'm really excited about what y'all are doing. And, and, you know, you leave with things that feel useful without having You know, especially if you're an extrovert, you just like talking to people. Like, discovery interviews are not bad.

Yeah, they're great. And you find people will talk to you all the time and they'll compliment you, say, wow, solves a huge problem, please let me know when, when it's available, right? Yeah, you take that as validation. And it's just like all this kind of stuff that feels productive but isn't.

Yeah. And if you're coming from a consulting background, that was the first step of every single project was you would put on a slide, we talked to 47 people in the industry, including 13 VPs, 3 CEOs, and here are the 7 bullet insights that we, that we took away from it. And so it's, it's easy to get into that groove because it worked in that, you know, in the context where you're just, you know, convincing a VP that they need to change their strategy or something.

And yeah, and at some level it makes sense, but that's what we were talking about at the very beginning is when you zoom out, it makes no sense.

Yeah, let's talk about the wave and dam. So we're bringing back a framework that you introduced a couple weeks ago, which is startups are operating either on a, on a wave, they're at a dam that, you know, breaking through a dam, or in a river. And rivers can be fast and slow moving. We're not going to get as much into rivers, but maybe to like briefly recap, a wave is an emerging set of new projects that like an entire sector or part of the economy experiences or role. Like there's a bunch of ways that it can be formed, but it's frequently there's a new emergent technology that causes a new project to appear on a bunch of people's to-do list. And then a dam, there's an existing shared project that everybody is just doing what they can with. And then for some reason, like this is where you're, you know, the supply comes in. Maybe there's a change in technology, but it allows you to break through that dam and people rush, rush through that dam because it's an unavoidable project that they don't have good options for that, you know, all of a sudden a technology allows them to have an option for. Is that a decent characterization of it? Yeah. Let's talk about how those, how those play in, like, what does, what does it look like when a founder or a founder team is trying to address a wave and like, that's where their idea is coming from.

Yeah. So with a wave, so these are all like the principles still hold. You're still looking for pull and you're still going where the work is, but it just depends where are you going. If you are focused on a wave, which basically is a new project that is emerging on people's to-do lists, you need to go to the forefront, to the frontier and basically like you gotta be an SF tinkering with AI agents with a bunch of other people who are tinkering with AI agents or whatever the next thing is. Because what you're looking for is the thing everyone's trying to do with AI agents, but they're unable to with the current option set. And so you build something for yourself there to help you kind of like solve something. And then you show it to other people and they're like, oh, hell yeah, I need that. And then, you know, the entire world, like every single software company and 6 to 12 months is going to be implementing V1 of their AI agents and they're going to need this, right? And so that's the, the point of the wave, which is you're going to wherever the frontier is and you're trying, you're doing stuff yourself at the frontier and building stuff for yourself that other people who are also at the frontier use and everyone else follows. If you're targeting damn, you're not going to SF necessarily. You are, you know, that depends. Like if you're, you're, let's say you're selling something to financial advisors, right? You're going to your local financial advisor and doing work with them to see where is there potentially pull here given all the new, given that AI is a thing now. What, where, where is pull potentially in their given day as I work alongside them? And then when you generate a hypothesis just from emerging, just from observing them, you then just show them, hey, here's my hypothesis, right, of what your pull is and what we could build. And if they're like, oh my God, yes, right, that's— that has the— that has the likelihood of being— you're bursting it down.

This is, you know, thinking about these two, I, I'm— I've been I don't know, just noodling on like, what's the difference between these two founders and what's the difference between the opportunity that they're looking at? Like Waves to me feels somewhat academic. Like you talk in the blog about, you know, ex-Meta— was it, was it Meta engineers who were working on this vector software and like that? It feels like universities, like a lot of advanced research that are toying around in theoretical you know, highly technical, not immediately monetizable, like that feels like this is a place where that like patents becomes really important.

Sometimes. Yeah. Sometimes. So like another example, I just read like the biography of, of, uh, Bill Gates or like the, the story of Microsoft. Right. And the original story there was that, uh, PCs, microcomputers or whatever they were called at the time, were becoming a thing. Right? They, they saw him and Paul Allen saw the first like PC type thing in a magazine. And they were like, hey, there's gonna be a bunch of people building these PCs. They're gonna need programming languages on those. And so they built the ability to put to like code in BASIC on for these personal computer manufacturers. And they did that while they were in school. But like, it's kind of, they're seeing this group of people who are trying to do something that's kind of at the frontier and building something to help them do that.

Yeah, that's interesting. And let's contrast that to, to DAMS, which feels much more tactical. Like it's an application of a technology that was part of a wave frequently is like kind of how I think about it. How do those founders approach that? And you say this is your favorite, like this is where this is kind of like your bread and butter. It's like there's somebody that's pissed off. That's looking for a solution. Dear sweet goodness, like, help me stop suffering here. And, and then, you know, the dam is where you work with founders, like, really, like, you know, burst through that and help them do it.

Yeah. So, so I've seen, I've seen both. I just, I personally, like, my MBA consultant brain really prefers the dams because the waves are, it's just uncertain if the wave will ever come, if it'll hit, if you're wrong. Right. Whereas for a DAM, you basically have a bunch of customers who are kind of blocked right now. And so I know if I can get one across the line or if I can get five across the line, then I can just grow very quickly. And so, and here we're going to a known market, like a known kind of customer subset and offering something new. And, and, and so it's, you know, it's Again, I don't know if one can lead to bigger companies or not. I think there are really big examples in both directions. So it's not clear to me. It's just this one is, is, um, where you're going, you're often going and working with like real businesses today and helping them accomplish something big, which also just gives me some satisfaction versus right, like where it's hard to tell if you're, if you're LARPing or not, when you're kind of playing at the Wave.

Yeah, yeah. Or, you know, you just guess wrong or you're blind to another technology that's eventually going to come out. All right. So let's talk about how do we know that we are right? What is conventional wisdom? And here we jump into round 2 of the boxing match with the conventional wisdom, this time directed at design partners.

Yeah. So in theory, like, you know, you're supposed to get a couple of design partners who help you build the product. They buy into the vision, they buy into to the mission and yada, yada, yada. And like what, what that's actually doing. I've seen so many examples where people come to me and they're like, yeah, we have 3 design partners and it's great, but nobody else is buying and we don't know what to do. And it turns out that the design partners, when people hear the word design partner, the light in their brain that was like, I have an actual thing I'm trying to accomplish in my business. And I have bad options for it, switches off. And the light in their brain that says, I'm going to be able to have fun working with a startup without risking anything, goes on quite often, right? And so you wind up going down a path that is an unserious path because the people that you're work— you think they are actually using, buying, right? You think that But in their mind, it is a totally different thing. And so because of that, you wind up spending months to years fine-tuning your product to their feedback to get it to, to, to, you know, ready for the broader market. And then you go out to the broader market and the broader market doesn't care because the customer wasn't in the right frame of mind.

And how do you, how do you work with like, let's say I'm a founder that's thinking about how do I get somebody, and I'm having a hard time getting a first customer to even use the product like that. I think that when everybody would rather have somebody purchase their product than be a design partner, but they, they struggle with that. And so it's how do I work with somebody in real life? Like, how do you— what would you say to me for that?

I would say it's often harder to get somebody to buy into a design partnership than it is to get somebody to buy a product. To buy from you because for design partners, they're now thinking, okay, this isn't actually going to help me. I'm going to have to give this startup feedback. And it's like, uh, it's like no longer a mission-critical thing. It's a nice-to-have thing. It's a kind of ego project for them often. And so instead, yeah, it's often people don't sell because they have the wrong idea about sales in their mind. They think it's about persuading people and they think, you know, it's about pretending you have a product when you don't. And as these things are like totally backwards, I've written before on this, we'll link to that as well. But, but it's just often, it's just, we were in the wrong frame of mind here, which is like, I need to present Figma mockups of a product that doesn't exist and convince them they should want it. And instead it's, no, I need to be talking about demands and where their options aren't good. And given that, I need to propose supply, whether it's one screen or whether it's just like a written thing that they pull and they're okay with the fact that it's not perfectly built into a seamless UI yet.

Yeah. Yeah. You know, and maybe one other thing to hit on this, you say that the objective is not It is the bare minimum is the sale, basically. The real objective that you're working toward is retention, is the right level of satisfaction at the customer that continues using your product over time, and that scales across a broader, you know, a broader number of similar customers with similar projects on their to-do lists. Yes. How do you like— is that a fair characterization? Like, what would you add to like, what is success? And how do you actually— how do founders that you work with actually know when they've got the got the thing that they need to be building.

Yeah. So, so like buying is the first step and, but like what you're really solving for, as you mentioned, is customer retention, right? Like what we want is we want people to buy and it would be weird if they stopped paying you. It would be weird if they didn't upgrade or refer others or whatever. And so what we're really designing for is the kind of like retention experience. But to get there, there's only one door you can go through to get to retain customers. And it's the, they bought something, right? And so we're not even focused on that. Like it's, it's unclear what we're focused on with the design partnership thing. It's just kind of like a checklist thing. Just, you know, like it's totally unclear, but what we need to be focused on is can we get people to buy something? And then when we deliver it, can we figure out at what point they say, oh my gosh, yeah, 100%. I'm going to renew. Like, I, it would be weird if I didn't keep buying this. Right. And, and we're ultimately designing for the, the latter, but to do that, we have to start with the former because if we don't start with the former, then any of the feedback we get from our design partners is not relevant. It is often pointing us totally in the wrong direction because they're not thinking about this to solve a project to help them accomplish a project, they're thinking about it as just like, I'm going to give product feedback and I'm going to get early access and I'm going to do da da da da da versus like, I'm actually trying to accomplish something and I'm going to assess this as to whether it helps me accomplish that thing.

Yeah, that's, that's interesting. And maybe to add to that, there's, it's, it's also thinking about the loop that we've talked through, I think a couple of weeks ago on in the factory model. It's also figuring out not just— it's not just retaining all customers, it's retaining the right customers. And early on, you're gonna sell to some of the wrong customers, and that's okay. Like, you are learning about who the customer is that you need to be selling to so that you can improve your outreach and improve that whole system that, you know, the factory that startups are building.

Hell yeah. Yes, the Padawan has become the master.

Well, let's talk about making this practical. What should founders that are listening to this be thinking? And is there anything tactical that you'd say they should go out and do?

Yeah. So, so the core thing which we're going to talk about next week is like, how do you actually turn this into a structured process to figure out what people want and to like test an idea? And so What should you, if you don't have an idea, don't go to the whiteboard, go to where your customers are, do some work with them, spend a week there and like figure that out. Right. And I think though, there we go. Okay. Well, uh, uh, the phone has rang twice here and they're both while we're trying to record, which is amazing. Um, so, uh, so like first thing is, do you, do you actually have a hypothesis of pull? If not, go where your customers are, work with them, and generate it from that experience working with them. Okay, that's thing one. Thing two is if you have a hypothesis of pull, what you do is you write it out using the frameworks I've given out before. You talk to 5 potential customers next week or this week, whenever you're listening to this, as soon as possible, and you see what happens in those calls. And then you analyze, you revise your hypothesis, and you do it again until you can basically predict who will pull and who won't. And that's the point when you're trying to sell, and then you're trying to deliver, and then it kind of turns more into this factory, right? Where you're, you're pushing people through the factory, they're pulling themselves through the factory, you have some people falling off, and you're trying to analyze why and debug from there. But the, core thing to do is write out a hypothesis, go test it with 5 potential customers this week, regroup, analyze the calls, analyze the conversations, and then do it again until you feel consistent pull.

Yeah, love it. Love it. And that's, you know, you've got a way that you work with, with founders on this through, through sprints. Like, what is anything to add on how, like, how sprints work and how you think about, like, systematizing it with, with founders you work with?

Yeah. So, so when you think about it as we're going to do, we're going to test things in blocks of 5 calls, then it's pretty— there's like a couple of different points to check in. There's a point at the beginning when we're crafting our hypothesis and trying to figure out who we're going to reach out to and how to get them to actually talk with us. Right. And so you can, you kind of like have a, you have a workshop then, and then you kind of have to learn how to actually have these calls in a good way is by watching other founders. Have the calls and like seeing their recordings and seeing what works and what doesn't in those. Okay, cool. And then after you have to review the calls and say, okay, what did we actually learn? What do we hear? Was there demand here or not? And so yeah, what I found is helpful and the way a lot of founders pull me in is to help them set up the hypothesis, figure out how to have the calls, and then analyze their calls, help them kind of run calls better, but then also debug the calls they have and say, okay, what's our next hypothesis? And that is a sprint. You run that until you've kind of got a, we'll say, a validated hypothesis of demand, by which I mean you talk to 5 people and 4 of them buy and you kind of know why the other one didn't.

Yeah, yeah. Love it. And we'll include links in the description if anybody's interested in working with Rob. He's got a sprint starting here in August. But that's like, he'll start them every once in a while. So even if you're listening to this later, or you can join Mid-Sprint, like it's alumni that join your stuff have access going forward. Anything else, Rob, that you'd like to add that we haven't hit yet?

No, I think this was, I think we covered it all.

We've got one mailbag. Our very first, you know, request came in. This one's Do you have a— you have 2 minutes to respond to a quick question?

Yeah, I'm just sweating here. So we're good.

Yeah, we'll see if this makes the, makes the final cut. All right. So and I'm sorry if I'm, if I'm mispronouncing your name. Bokar Dia says, love this Rob. I'm sure he meant to put I love this Rob and RC, but he just wrote, I love this Rob. The Wave Dam River. This was from the Wave Dam River. Blog post analogy is a good way to understand why some startups feel like they're pushing a boulder uphill while others seem to have tailwinds. Curious, how do you think about distinguishing a real wave forming versus just noise at the frontier, e.g., metaverse? I tend to think there is no real way to tell until, well, the dam breaks. We had kind of touched that a little bit in this one, but do you have a response for Bokar?

Yeah, I think it's just generally quite difficult to do. I need to think about it more. And what I'm actually doing like now is I'm basically reading business biographies and my goal is to read all of them. And so to try to figure out like, why did Microsoft work when they were tinkering at the frontier, but others didn't? Why did Oracle figure this out when others didn't? Like, what are the patterns here of of when this works. Um, my sense is that a lot of the things that are— that don't work at the frontier don't find— it's not even they don't find early adopters, they just don't find anything at the frontier. And they're just kind of tinkering with technology at the frontier versus tinkering with technology for businesses or users at the frontier. And I think— feel like the, the metaverse probably falls into that kind of thing where it's like, we don't really have a hypothesis of who's going to want this except for everybody. And so if we had perhaps focused on a very specific kind of person who they're like, it is more likely that the metaverse would have kind of come into shape sooner potentially. But that's like my emerging hypothesis of this is like, you know, like with Microsoft, right? There's a bunch of businesses that are trying to sell personal computers to hobbyists. There are hobbyist clubs, hobbyist computing clubs all over the US at this point. There's microcomputer companies that are emerging. They all, and you can kind of like, it's crazy at that time that the microcomputers were coming. Like there was no ability to forecast how big it would be at that point. People even, one of the quotes from that, what I thought was pretty interesting was like the thought of having a computer in your house was basically the same as having a nuclear submarine in your house. Like it was just so weird to most people at that point. And so far-fetched, but people, there were businesses building and selling to hobbyists at that point. And so then you say, okay, I'm going to sell something to these businesses who are selling to these hobbyists. And like, maybe it's just only a hobbyist thing, but there's at least a market of hobbyists who are playing and tinkering with this and we can sell to them. And then maybe there's going to be a computer in every home. Eventually, like that's a far-fetched idea, but, but who knows? Like maybe that's the case versus from the starting point of like, we're going to build a computer for every home where you're not starting with hobbyists, you're starting with this kind of like generalized ideal thing. And, and maybe the hobbyists would have emerged then, or, but maybe not. Like you might've just built the wrong thing by focusing on the kind of like general thing at that stage.

Love it. Love it. Awesome, Rob. Anything else on, on your mind?

No, I need to go jump into some water now. It's so hot.

All right. Well, I hope you continue on the recovery. Anybody else, if y'all check the links out that we'll leave in the description, if you've got something you want us to talk about or a question, drop it in the comments. We typically check like YouTube, Spotify. We can also look at and or on the blog posts themselves on Rob's Substack or on my OnlyFans account.

I also keep close tabs on that. Oh golly.

Hopefully there's a mental image that, you know, well, now that you've lost some weight with the food poisoning, your OnlyFans might improve. All right. Well, anyways, we'll see everybody next week.