Scott Belsky left Goldman Sachs to build Behance, a creative network he bootstrapped for five years before Adobe acquired it. He discusses the "messy middle" of startups, killing features that don't work, and his later investments in Pinterest and Uber, emphasizing how empathy and discipline separate great founders from the rest.
Chapters
Well, I want to make this interesting, so if anyone wants to interject with questions or whatever. My passion for the last 10 to 12 years has been helping organize creative people in teams. I feel like it all kind of came out of a sense of frustration because I felt like there were so many interesting people with ideas that just never got shit done. And it was like, wow, these are interesting creative people, and they're always kind of complaining that there's no progress being made and whatever. And there were things like TED and other magazines and conferences and stuff all about ideas, but there was so little focus on the execution side. And so the origin of Behance was this mission to organize the creative world. And so I would tell people I want to create a company to help organize creative people, and they'd be like, yeah, good luck with that. Because creative people oftentimes wear disorganization in some ways like a badge of honor. It's like, oh, I'm disorganized. It's sort of like the absent-minded professor type of drama. But in fact, the most productive creative people and teams in the world are very organized. I think organization is a competitive advantage in the creative world. And so we built the business that we liked to call mission-centric and medium agnostic. Mission-centric meaning it's about organizing creative people, and then medium agnostic meaning we would have a conference or paper product line or a network like Behance to help achieve this. And so that was the origin of the business. We were bootstrapped for 5 years in New York, barely making payroll some of those times. And we were talking a little bit about some of the the messy middle, as I like to call it, the lost years of Behance and things I learned and things I wouldn't do again and things I would. We were a venture-backed business for 2 years after 5 years of bootstrapping. We were acquired by Adobe in 2012. I joined the company and took over the VP of Product role overseeing the Creative Cloud services and the mobile products and rebooting that whole franchise and learned a lot about being in a big company fighting fiefdoms and leading change within a larger environment. And actually, I found it strangely interesting and exciting. I didn't expect that either. So I was always torn, like, should I be an entrepreneur, or should I be kind of a big company person? And I kind of liked both a little bit.
And so, yeah. Is it public? How did Behance end? Are you able to reveal any of those numbers to give people perspective?
Sure, I mean, you know, the— I know I'm putting you on the spot, but you said it would be fast. The rumored acquisition The acquisition price has never been confirmed, was $150 million. And after a small financing, so we had a great team that did really, really well. And what was actually interesting was that 3 years into being at Adobe, we were all basically still working together. We had very few people leave at all. And even now, 4 years later, over 4 years later, I would almost say the majority of our team is still there because people just love working together. It's a great culture, it's a great mission, it's a great purpose. And everyone talks about the term unicorn. I feel like the true unicorn is an acquisition that works. Most everyone always talks about acquisitions being the end of a culture, the end of a product, the end of a company. And we just had an incredible integration. The team was empowered to do important things. And it's been a very good outcome, I think, for the whole team monetarily, but also just work-wise and stuff like that. And some people have moved on.
So how many people here, work at a company that has less than 20 people? So it looks about half. So I think that one of the reasons a lot of people like to come to these things is they love to hear about the early and the beginning and all that. I mean, you've been doing this for a long time. Can you talk about where you were before you had the idea, what made you think that this idea was worth pursuing, and what the first 6 months were like?
Yep. So I had a background in business and design, and then I went to work at all places at Goldman Sachs. This is like 2001, 2002, and I was doing a finance job, and then a year and a half in, I was like, this is not what I wanna do with my life, and I was gonna leave. And I went to my manager and said to her, I'm outta here, basically. And she said, if there was any job that you would have at the firm that you would find interesting, what would it be? And so I said, well, it'd be really cool to understand how the firm works. Like, how is it run? How is it— how are leaders chosen? How is succession planning managed? I was always interested in kind of the leadership side of things. And so I got this job in the executive office working on this new team that had just been put together that was started by the guy who helped Jack Welch, the former CEO of GE, build this thing called Crotonville. And Crotonville is like GE's leadership development center, and that's how they develop leaders and stuff like that. And so I was the junior guy on this team, and I had all kinds of weird jobs. So I had really fun jobs, like helping people write talks, and Hank Paulson, at the time the CEO, would give a talk. I was helping him write it. And I also had weird jobs like helping film and write the script for the partner video, and they would be chasing each other around and doing jokes and stuff. So I had really weird— I think I was the youngest guy in the executive office. So I was asked to do all these random things. I learned so much in that 3 years. I learned that I did not want to be at Goldman Sachs forever. I also learned that I really enjoyed organizational improvement and helping develop leaders. And I also realized that I wanted to apply a lot of the things I was learning there to the creative world. And so that's when I started the idea of Behance when I was at Goldman. And I left to begin that journey.
And what was the original idea? What did you say, there's something here?
Yeah, so the original idea was we're going to try to organize the creative world. I felt like we would build a—
That's a huge—
I know.
That's a huge mission.
And for the first 5 years, it was basically paring it down. It started kind of broad, and then we were like, what's working and what's not? And let's try it in different ways. And where we ended up was building this network. So Behance, for those of you that don't know, it's sort of like a LinkedIn for the creative world. It allows people to showcase their portfolios, allows them to connect with each other, allows companies to hire talent and sort and search and whatever else. And there are probably around 10 million or so creatives on the platform now. And that was really, what really, really motivated me around that was there was no transparency in attribution in the creative world. You never know who did anything. Whereas when you watch a movie and you see the credits, you know who the second grip and the third grip and all these people were. When you look around, you see billboards and designs for anything. All the stuff that compels us to take action on things and to relate to news and things as they happen, it's all created by creative people. And these people never get credit. And actually, agencies take credit. Design firms take credit. But you never know who actually did the work. And so the idea was with Behance, let's expose this information and with attribution give people opportunity.
And when you first came up with this idea and you decided to quit your job, did you actually think that this was going to end to be a huge business like it was, or—
No, I didn't. And it's funny, like I had— so I had— I started the company and I hired a designer to work with me, a guy named Matias from Barcelona. And he kind of evolved into a co-founder role a couple of years into the business. And 5 years in, when we first raised our capital, I remember we were talking to each other. Because we were asked earlier that day when we were doing an investor presentation what our exit plan was, and we realized that for 5 years, we had never once talked about our exit. We never talked about it.
So how were you paying the bills between—
We were break-even. We were trying to be break-even, and through random things like conferences, and paper products, and speaking, and books, and weird stuff like that.
So you guys were just kind of, you had this big mission, but you were just doing all these little projects to make ends meet in order to achieve this big thing?
Yeah, and we kind of thought maybe this could be a lifestyle business. As long as we're having fun, we love our team, we feel like we're doing good work, but it was never like, what's our outcome gonna be? And when we would hire, when we would interview people, and they would be asking about what's your plan, are you gonna be a public company, are you gonna be acquired, they would never be a fit for our team. So we just built a team that didn't, it's not that they didn't care about their financial outcome, but they just felt like we were building something important, We felt like if we did a good job, this would be valuable for all of us, and we just never had a structured conversation around the exit. We just were so engaged in the process.
Between starting these projects that would actually pay the bills and your first couple hires, how were you able to manage that? Had you saved up a bunch of cash from working at Goldman?
So I put some of my money in from Goldman. I think I got $150,000 over the course of that few years from family. That were like, that was sort of like my angel money, if you will. But I really call it bootstrapped because that didn't really last us long. And we did things like conferences or gatherings like this. We would basically do anything we could to try to just meet that break-even mark every month. And where everything changed was when about 5 years in, I started to feel like we had an amazing team of designers, engineers, and others who were coming to me saying, I feel like I need to hire her or I need to hire him in order to build the best team, do the greatest work of my life, and Scott, you're not letting me do that. And I felt like at that point I was strangling the potential of the team, and to me that was a very, I had a toxic reaction to that where I was like, oh my God, we gotta raise funding, we have to capitalize on the opportunity we have here, we can't strangle the potential of the team.
So from years 0 to 5, your mission was to help creatives basically, but you did it in various different ways. It sounds like a lot's going on. How did you actually spend each day? I mean, it seems like controlled chaos at best.
Yeah, so it wasn't controlled chaos, but it was different periods of focus at different times. And I don't know if I would recommend this to others. I think that when I look back upon it, It was when we killed certain things that everything started to become more focused and productive and started to grow more. And they were all hard to kill. And we talked about this a little earlier, but, you know, what I was saying is that it's easy to kill things that are not working. It's really hard to kill things that are. And writers and novelists, you know, call this killing your darlings. They're usually like the characters and the plot points that as a writer you fall in love with. And become sacred to you, but you have to kill in order to have a more focused and tight novel or output. And as entrepreneurs, we have to do the same thing. You have to kill some of the things. It's almost like bonsai cultivation. You have to kill those nice new branches in order to make the bonsai kind of grow into what you want it to be. But it's hard, because you're killing off all the nice newest little branches and stuff. And it's the same way in a business. Things are working and you're just paring it back. It's sort of easy to intellectualize this, but it's really hard in the process because first of all, it's revenue. You're like, wait, we're not gonna do another event, but we made $20,000 doing that. How could we not do that? It's like money. Except for the fact that by doing that event, you're taking your eye off the ball of the thing that matters the most. And so what I think I failed at doing early enough was paring back more quickly. And I think it kind of, it snowballed until I had to do it. And I have to tell you, they were the hardest decisions ever to cut some of these products or outsource some of them. We had a task management tool that was sort of like a Basecamp competitor, and we had loyal subscribers and people loved it. We had to kill it. It was the hardest thing to do, but a week later, it was like breaking up with that person that you've been trying to break up with for years. and you're like, ah, like liberated, and the team just became more productive and focused, and the brand became tighter, and it was one of the most, and I just remember thinking like, wow, I don't know if I should be proud of myself that I made the decision, or ashamed that it took so long.
So how many people here are running their own company at the moment? Oh wow, a lot, and how many are, let's say, product managers where they have to decide what's going on with the product? So a lot of people. So one thing that we face, and I imagine everyone faces this, is they have an idea for something, and they build the first iteration. And sometimes things work really well. Sometimes things fail right away. Sometimes it kind of works. And that's like a really hard challenge, is deciding what stays and what goes. You kind of talked about that a little bit. But can you get even more specific on, let's say, this task manager, about some of the numbers that you were seeing? And what you did with your current team after cutting it and things like that? Because I think everyone struggles with this.
Well, there are two approaches, right? There's the lean approach of like launch something super simple, try to get one thing right, and then kind of carefully add to it over time. The other approach is to launch like a bunch of different things or features or whatever, and then see what sticks, and then kill as quickly as possible the stuff that isn't working to make the stuff that is working get more attention. I actually don't think there's a right answer to which approach to take because as long as you're willing to kill the stuff, I think that both merit some sort of credence from a strategy perspective. When you have something out there, it's really about learning to listen to it. Learning to, developing the gut instinct around how to mold it really, and I think one of the mistakes that we make as entrepreneurs is we build something out of passion instead of empathy. When you're really passionate about a problem, you go and you just solve it, and you have such a vision for what you should create. The problem is is that if you're not doing it out of empathy with the customer's problem, sometimes you just create something that's like 5 degrees off or 50 degrees off or 180 degrees off, but when you really anchor yourself repetitively with the problem and the people that you're solving it for, you're just like, there's a gravity to that. So it's hard because we're passionate people and we become very, very convinced that we know what this needs to be. I always force myself and my teams to just spend tons of time with the people that we are trying to solve the problem for. Now, this doesn't mean focus groups. It doesn't mean asking them what they think we should create for them. What it means is just getting ourselves into their daily life. Like, what are they doing? What is friction? Observing it as if you were, you know, in the wilderness, you know, observing people and things in their habitat. And that's where you get the empathy. So it's, I think it's really a process driven by empathy as you pare back and optimize the product offering.
Can you talk, can you help turn that into action? So you said observe people, don't necessarily listen to what they say they want, but kind of observe them and decide what's best that you think you need to build. What does that actually mean in terms of how you spent your time? Does that mean calling them? Does that mean? Hosting meetups?
Yeah, it actually, sitting next to people as they work was one of the big things. I think actually one of the greatest things for Behance was when I went and did that project of writing the book Making Ideas Happen in 2010. It was a book about the most productive creative people and teams in the world, and so I went and met with a lot of creative directors and designers and illustrators and writers and entrepreneurs, and the calling card to get in there was I'm writing I wanna do some research, understand how you manage your team, and whatever else, and it actually was a way of forcing me to develop that empathy that I'm talking about that informed the product that we were building for the creative world. And so I don't know if I would've had the discipline to do this if I hadn't had a deadline for the book. I would like to say that I would have done it, but only through that process did I realize how important it was, and now I'm working actually with a new team focused on something in the professional independent professional services provider space, and they're just doing tons of sitting down with personal trainers between sessions and asking them, so what's your day look like today? How do you know? Did you write it down on paper? Did you schedule it in your phone? Was it annoying to arrange those things? Did you have any last-minute changes? Did you have any cancellations? Are you pissed about that? All these empathy-driven questions are helping guide that development of product.
So in about 5 or 10 minutes or so, we'll answer some questions, 'cause I think that's one of the best ways to learn. But aside from being an extremely successful entrepreneur, you've, I believe you've invested in Uber and Pinterest both when they were valued at around $3 million. Uber's now worth $70 billion, so I don't know, what's that, like a 20,000x? I think that's maybe 20,000x, I think is what it is.
As far as I'm concerned, any company that's still losing money is worth zero.
That's fair. And then Pinterest now is— I don't actually know if they're profitable or not, but they're in the $5 or $6 or $7 billion range. Those are some pretty good pickups early on. What— how did those come about?
I don't know. Listen, I don't— I would love to say that I'm just like great investor, but the truth is, is that 2010, Behance was still a bootstrap business. We built a site that was a design site that was a grid system. Ben Silberman from Pinterest was also building a site around collections. And this was a time when Delicious was recently, I guess, acquired by Yahoo, was all the rage around collections. And so people in Silicon Valley told him, we don't need another collections website. And so he, what does someone do when they can't raise money in Silicon Valley? They go to New York. And they meet with people like me. I don't know.
How did you know him?
I had gotten introduced to him through a friend, and he was interested in product feedback and talking about the role that designers could play as users of Pinterest. What I did is I looked at our Google Analytics at the time and realized, wow, even though Pinterest is a small traffic driver overall, The growth of traffic from Pinterest is outperforming other sources. And that really interested me. And started to work with him a little bit on some of the product questions. And then when he said, would you like to participate in my seed round? I was like, sure, a little bit. I was not really making much money at the time, so it was a small investment. But it was also, for me, it was a way to learn more about another business.
And I imagine as a bootstrapped founder, you probably didn't have a ton of cash, so was this a big deal for you?
Yeah, it was, and I remember, I kid you not, I hate to admit it, but 6 months later, I was like, should I have done that? Because it was like, okay, now I have less money in my bank account, and this other site, who knows what's gonna happen there. But I think that I developed the principle of, I wanna support my friends just like they're supporting me and my business, and I started to have this, the ethos I developed was when I have a real resonance with a founder and the problem they're trying to solve and the product that they're building, and I feel like I can add a lot of value on the product side, why not have some skin in the game? And that was also the story behind working with Garrett Camp. The story with Garrett was that—
And that's the founder of Uber.
He's the co-founder of Uber. Is that he had recently purchased his company StumbleUpon back from eBay. So he had sold it to eBay and then purchased it back from eBay. So he was now CEO again of this company. And StumbleUpon and Behance, Behance, we were doing some partnerships together. And so he was, I think it was also 2010, this was like my third investment. So I should have stopped there.
So it went a relatively small check in Pinterest, and then what was next?
I think it was this company called Taddle8, and then it was Uber.
And that was all in a span of how many months?
Yeah, like a really short period of time. He was in my office, which was also my bedroom, and we were talking about StumbleUpon and Behance, and then I kid you not, after the meeting, he pulls out one of our notebooks, one of the dot grid journals that we would make at Behance when we were bootstrapping our business, that I had sent him, 'cause he was one of our partners. He's like, "I'm actually working on this side project that we're gonna start testing in New York at some point, and it's a livery service." And I looked at him being like, "You just bought back your company, and you're trying to make it work. I'm trying to make things work. Isn't this textbook 101, only focus on one company at a time? And you wanna build a car service?" And he was saying to me, "You wanna help me out a little bit?" I'm like, "Whatever, man." And—
He asked you?
Yeah, no, he was telling me, do you have ideas? Because we always kind of batted around ideas. And then he just sort of started sending me versions of the logo, and the early prototypes, and whatever else. And then that's how I got involved with his company. And by the way, everyone looks at a company like Uber and says, oh, that was logically a great company. But the truth is that— It didn't really have formal leadership back then. Travis was an advisor, Ryan had jumped in and was helping run things, Garrett, again, had another full-time day job, and investors and a board and stuff like that. So it's, none of these, that's one of the things as an investor that's really crazy to me, is that investors are always talking about pattern recognition and stuff like that, and they forget that they're in a business of exceptions. Great investing is. It's like figuring out when to make exceptions, not when to follow the patterns. And so it's really about kind of some amount of pattern recognition, but then knowing when to make an exception. It's actually very similar, I think, to building great products. Great, great products are, I would say, like 95% familiar and then 5% retraining of a behavior or introducing a new behavior that the product product user never had. Example with Behance— sorry, I'm hopping around here, but it's how my brain works. But Behance, we started this network, and we called the creative fields that you could join, like industrial design or illustration or motion graphics, we called them creative realms. And we called the groups that you could join circles before Google had it. And we had all these creative names for things. First of all, my Spanish co-founder, couldn't even pronounce the word realms, which should have told me something, right? And then users, you know, over the years were just like, I don't know what you mean by realms. And so eventually we were like, fuck it, we're going to call it creative fields. Like, just make it simple. And then of course everyone started using it. And when we called circles, when we turned it into groups, everyone started using them. So, you know, it just made me realize that again, like great products are, you know, you look for a lot that's familiar and then you like try to make some exceptions that are really like An exception, for example, was when Periscope was launching, and we had a debate about—
Yeah, you were the first—
I was one of the first investors in Periscope, and I met the team, and I love them, and we were working together, and the question was, this was around the selfie phenomenon, when every app was a selfie, and so the common pattern here was, well, when you open Periscope, it should be you first. It should be a selfie. It should be the rear-facing camera. But the ethos of the company was experiencing the world through someone else's eyes. And so the team made the decision to have the default to be facing out, which was a bit of the retraining back then versus the other apps that were hitting the market. Like Meerkat, I believe, was face forward by default. And so it's little things like that. You have to know the little things you want to change, but then try to be familiar and try to follow the patterns on everything else.
We're in San Francisco. We're in Silicon Valley. A lot of people are trying to raise money for something great. Can you talk about— so you kind of described a little bit about investing in—
I better start drinking here or this is going to—
Yeah. You talked a little bit about investing in Uber and Pinterest. But was there a defining moment? I mean, what made you actually believe that what they were going to do— or was there anything that you saw in them as an entrepreneur, or did you see it in their product? What can someone take away from that on how basically— I mean, a lot of people are looking for investors for validation, but also it's actually legitimate that they've got something great. What can they take home and be like, all right, I'm on to something? And what did you see in these guys that made you believe that?
Well, I think for me it's— I mean, the trite answers are like, oh, it's the people, or it's the products or whatever. I mean, to me, it's really, first of all, and I think this goes for if you're investing in something or if you're hiring somebody or if you're working for somebody, every conversation you have with that person should be a step function more exciting to you or interesting to you the next time you have a conversation. There are a lot of people we meet where the next conversation we have with them feels like the first conversation. And it's like, okay, now we're running out of things to talk about, and I don't know, we're covering, we've kind of covered all the terrain already. But every now and then you meet somebody where every time you talk to them, it's a step function more interesting than the time before it. I think that's something you need to look for, first of all, on the people side. On the product side, you wanna look for discipline. I think you wanna look for some sort of ethos or something that makes you think. And surprises you. I mean, I remember with Ben Silverman, I, again, I had never done an investment before, so I remember asking him once, so, what's your plan for the next 6 months? And I was expecting him to be like, well, here are our next 3 sprints, and then the milestone in a month is going to be launching this feature, and then that feature, and then that feature, and that was what I was expecting to hear. And he said to me, you know, Scott, over the next 6 months, I want to have a better process. I was like, what? That's your goal for the— and he really was trying to build a company that would last a lifetime. And he had this— I mean, it was one of those humbling moments for me where I was like, oh, I'm sort of thinking in sprints and stuff. This guy is really teaching me something. And so that's, I think, another thing you want to feel from both the person as well as the way the product is being managed.
Was there any, so Uber's CEO Travis is notoriously aggressive and very sometimes controversial. Is there a similar story? 'Cause they seem quite different than, maybe a little bit than Pinterest. Was there a similar story with that?
It's interesting, it's a question around every company needs a playbook in order to exist and to succeed. And then every company needs to consistently revisit their playbook and decide whether it's the right playbook for the next chapter of the company or not. If you think about the ridesharing industry in general, to make this possible in the very early days, I mean, I remember there were days where I heard Travis was camping out in some local congressman's office to make sure that it could exist in that area. And you had to be, I remember also thinking in the beginning, like, I could never do this. This business, like, worrying about someone breaking my knees, or some, like, mafia-run taxi conglomerate in, like, rural Chicago, like, putting a hit on me, like, I'd be like, "Well, peace out. Like, listen, I don't care so much. Like, I just wanna be alive," you know? You had to have some degree of perspiration, perseverance, and somewhat aggression to be able to exist. You were fighting tremendous forces. And so in some ways, that was the perfect right playbook to start that industry and fight the incumbents that just wanted it to be the old way.
Was there a specific story where you were like, oh God, this guy is unstoppable?
Well, I think that just, I don't think there's a specific story, but I just remember admiring and realizing, Wow, there's really a unique playbook for every type of business, and this business requires this in the beginning. And I also know, I know the other number of folks on the management team there, and they really have tried to adopt a different playbook and iterate over time. And I think that it's hard, because as a company's culture changes, the reputation lags. So I think that, I think people will start to see, and I'm not just saying this, I really do believe, I think their next year is the year of the driver. They're really trying to focus on, empowering the people that are using the platform, and standing for more of an ethos, because they're in a different chapter now. And people need to, I think that, but it also teaches us another lesson, which is reputation matters, and you wanna make sure you get the benefit of the doubt, 'cause sometimes a rumor starts and everyone just assumes you did it, because of who you are, you were years ago, when in fact that may not be the case. So it's, you always want to be thinking about the type of company you are, and you always want to be changing it. I think you always want to realize the hardest thing for an entrepreneur is to throw out a playbook that worked so well for you for so many years, and recognize that it's time for a new one.
So we'll give you a second to take a drink, and does anyone have some questions that they want to start asking? Yeah, oh, I think we have a microphone that's gonna be going around too. We got two of them, okay.
Thank you, this was great. I wanted to know about the transition from Goldman Sachs into a leadership role in Behance. What sort of challenges did you face, and what did you learn the most about yourself? Well, listen, I didn't know anything of what I was doing, and I really was so naive. And I probably should have brought on— I don't know. I guess there were a lot of fits and starts in the beginning, to be honest with you, because Matthias, the designer who I'd hired to work with me, I just assumed that he, as a graphic designer, I thought that that's what you needed to design a digital product. I didn't realize the difference at the time, believe it or not, between that and real user experience design background. I mean, this is also 2005, where user experience design was not taught in school. This was something that was just a new field at the time, and so he whipped out Adobe Illustrator and started designing our websites and stuff like that, and it was this process of working together. The best thing that he did, bless you, the best thing that he did, though, was he hired people quickly that were better than he was, and he was able to build a team that could teach us what to do. The transition, it was a lonely time, and I think now reflecting back on it, I really, in a quick side note here, I really think that the shame that all of us are gonna have to deal with is the fact that the press and the media and everything only celebrate the starts and the finishes of things. And the messy middle, which is all that matters, never gets coverage, 'cause it is not sexy. So people love the starts, when someone quits their job or starts something, whatever, that's kind of interesting and it generates some talk. And people love finishes, whether it's an acquisition, an IPO, or a bankruptcy. They're willing to give you a headline. And when you ask somebody, tell me about your career, it's always a pithy one paragraph. Like, oh, I started this company, We bootstrapped it for 5 years, venture-backed, and then we got acquired. It's like, great, that tells me nothing. So what about the middle? The middle is all— it's 2 things. It's endurance, and it's optimization. It is enduring endless periods of anonymity and ambiguity. It's dedicating a portion of your brain to constantly processing uncertainty and never truly being present with anyone in your life because you have this on your shoulders, other people's careers on your shoulders. You have your own self-doubt you're reconciling. It is this constant, constant toll. It's also a lot of fun, right, to have that independence, but there's just that— a lot of endurance. And then it's also optimization. It is optimizing whatever seems to be working like crazy. And I think that one of the weird things people always say is like, "Don't fix it if it ain't broken," when in fact the truth is that you should Fix things that work. Anything that's working, make it better, 'cause that's your only chance of distinguishing what you're building and standing out amongst the mix of everything else that is mediocre. So the messy middle was really what I remember in the first initial years of Behance. Now I go every year to some of these big startup conventions or the Web Summit in Europe, and you walk to these startup pavilions, and it's literally thousands of entrepreneurs with a 2-foot by 2-foot space kind of pitching their thing. And you walk by them, and there's something in my gut that makes me feel so bad, because I'm walking by dozens of people who are all trying to survive and deal with that endurance. And you almost want to stop and let each person tell you their thing, just because it's like, I remember that. So that's what I remember in that transition, was just a lot of loneliness in that sense. But also, there was this— I was always trying to channel the romanticism of it too.
Were there any books or resources that you turned to to develop your leadership skills?
I think that being in the job that I was in at Goldman, this is where that helped because it was 3 years of focusing on leadership development and organizational improvement and stuff like that. So it kind of prepared me in some strange way to build a team and to lead. I think that Another quick thing that I learned very quickly that is somewhat counterintuitive is that the long-term vision that is motivating you to start something is not enough to motivate others on a daily basis, nor is it enough to motivate yourself on a daily basis. So what you have to do is you have to learn to short-circuit your reward system. Think about it. When we are born, we are motivated by our parents' gratification and love and whatever else. And then we have a, you know, we go to kindergarten and first grade and second grade, you start getting tests and you get a check on the test, and then you get a grade in the course, and then you graduate, and then you get a salary and a bonus. I remember Fred Wilson, you know, from Union Square Ventures, who was our backer, once said that the two greatest addictions in life are heroin and a weekly salary. And so to unplug from those things, these short-term rewards that we are all addicted to, is extraordinarily hard. And to say that this long-term vision of someday building this company that changes the world, or makes an impact, or makes you this grand outcome, is not enough to keep you motivated on a daily basis. Because after a few weeks, you'll fall behind on those television shows. You will realize that your friends are escalating their careers, and you're just in that period of anonymity, like trying to endure. And so what you need to do is you short-circuit yourself. And what does that mean? It means making up milestones, making up metrics. One of our things was we called ourselves Behance, which was a made-up word, and so every time you typed into Google Behance, it always said, do you mean Enhance? Do you mean Enhance? Do you mean Enhance? And the team was like, wow, Google thinks we're a frickin' mistake. Maybe that's our goal. Let's build enough blog posts, let's get enough portfolios online, and let's get enough SEO where someday Google doesn't think we're a mistake anymore. And that was a near-term thing. It had nothing to do with revenues or users or anything else. And eventually it was motivating enough, and we were looking at Google search rankings for us and whatever else. It was a really motivating factor for the team until one day we typed in Behance and it was like, Behance. It just showed up. And I kid you not, a year later Beyoncé became super popular. And it was like, back to square one.
That asshole. You guys want to ask another question? Over here, Jackie, in the back. What time? We have till 7:30, right, Jackie? Yeah, you have like 30 minutes.
Where have you failed as an investor and why do you think you failed? Oh, that's easy. I mean, there are a bunch of companies that I invested in, because you know, After my start, I was like, "Wow, I'm really good at this. I should be doing a lot of these." Yeah, I mean, that's a great first two. Right, so that's where things went wrong. It was always, it was always, it was always bad judgments on people. Listen, there are a lot of investments that I made that I still think I would've made because I liked the people, I thought they were right, and all the things that I mentioned spoke to me, and it just didn't work out. Competitively, they were building something that ended up being a feature of another product, the market changed, whatever, but there are some investments that I really regret because the founders were extraordinarily egocentric and there were signs. Like I remember one of these investments in particular, San Francisco-based company, and when I was talking to the founder, every time I would talk to him, he would name drop. People. Like, oh, hey Scott, this morning I was talking to Richard Branson, who really wants to invest, but great to talk to you. You also know so-and-so, right? Yeah, I was talking to him yesterday. I was like, whatever. I may have made a comment like, yeah, that's great, but it's not about the names. You want to find people that are going to actually help you and spend time with you. I tried to give him a clue, but it just kind of continued. And then his team started to feel like they weren't being listened to, and he was always out there trying to take credit for any of the ideas that worked, and would never put the team on a pedestal. Any chance he'd get, he would put himself on it. He was always at conferences, always trying to get his name out. There was something about him that just followed him, and I truly believe that the product and how blind he was to some of the empathy things, it was all a root of some of the things that I saw. So, to the point where I kicked myself, when it was all struggling, I was like, I saw this, what was I thinking? And so I think that those are the ones that I regret, where there was something that I just felt didn't jive, but excused it. It goes back to that point I made about, you're in a business of exceptions, and sometimes you meet a founder, or something rubs you the wrong way about the founder or the product, and you're like, well, maybe this is the exception. I'm feeling like this is not right, but, Maybe this is the next Steve Jobs, who people are gonna find is really an asshole sometimes, but is an amazing leader. I think that when it comes to values of the things you respect or disrespect in people, maybe that's one line you shouldn't cross and shouldn't accept.
Any big companies that you had a chance on that you didn't execute on?
No.
It's good. Does someone standing up have a question? I want to get you guys involved too. Feel bad you're standing up. Here we got someone over here.
Not yet, actually. I'm sure there will be. Yeah.
I'm curious if you wouldn't mind speaking to— you talked a little bit before about when you meet somebody who you might be investing in, how you get a bad vibe from them, but you excuse it because you think that they may be somebody worth investing in. Investing in. What would you say in that scenario if maybe it's a co-founder, right? If it's somebody that you've suddenly realized after really sort of combining with your forces, how do you overcome that and move past that challenge?
It's a great question because co-founder relationships are struck so quickly. People decide to date for years and then live together typically before they get married. Yet you'll come up with an idea and you'll be like, well, I'm in this pure, complete anonymity, no one knows who I am, no one cares, and I need someone to partner with me on this, and you'll strike a co-founder relationship so quickly. And then it oftentimes either you have to grow together or you grow apart. I really like the idea of co-founders in the beginning agreeing with what happens if it doesn't work out for one of them. Oftentimes, one of the two or three, whatever, will decide that they're not adding as much value, or you'll decide with them that they're not adding as much value, and can you have a way of having that conversation regularly? And also, what would happen if that were to be the case? I know co-founders who say, listen, if it doesn't work, we're gonna vest our own equity. So if it doesn't work within a year, I'll have a big part that's vested and non-vested. Or what they'll agree is that there's a buyout condition anchored at some sort of fair market value or a very low price to suggest, because I've seen great companies that end up failing because someone who is an early founder or involved with the team leaves and holds a big part of the cap table but adds no value. And their attitude is, well, it's mine rightfully, and so why should I give it up? What they're forgetting is that it pulls the incentive away from the team. It just sucks the energy out, and when investors look at that cap table, it tells a story. So it would just be great, I always encourage teams to just recognize that a company is a living being, and there's no cheating it. You just don't get away with owning a piece of a company and not doing the work. You end up losing in the long run, because you disincentivize other people from coming on who you end up needing. You disincentivize investors from participating who you need. So it's like one of those things you need to talk about. It's like a prenup in the beginning. What happens if this doesn't work? Let's just figure it out so our kids don't get screwed. So that's part of the answer, but I've seen that happen so many times. Great companies are able to maneuver this, because the truth is it happens. And sometimes it's not a co-founder, sometimes it's like the first head of product, or the first this, or the first that. When you hire people in the beginning, you can't be choosy, because no one knows who you are. And so you basically hire, in many cases, whoever will be willing to work for you. And so, by nature of the fact that you don't have a great selection, you're going to hire people that aren't right. So just build a culture that's all about performance. I think it's a mistake also to think of an early-stage team as a family. Because a family puts up with the drunk uncle that shows up on Thanksgiving because he's your uncle and you love him anyways. An early-stage company, Reed Hastings from Netflix calls it a sports team. If some guy stops passing the ball or someone just stops, then you'd cut them. And I think that's the way we should approach it. It's like we're a high-performance sports team, and we're all together in this, and we have camaraderie and whatever, We're going to cut someone who's not pulling their share, otherwise we're going to lose our matches.
Let's go right back here, if that's OK. Your hand shot up very fast, so you got our attention.
Thanks. So I want to know, how do you think about pivots in your own business and the companies you invest in? That's a good question. So I'm a big supporter— of teams making bold inflections in their plan, whether that means a completely different approach to their product or a completely different product, because the ability to make bold moves is your competitive advantage against your incumbents. If you have an operating business with investors and users and payroll and all this other stuff, you just can't make big moves. You're paralyzed in that sense, and if you're a big public company, you definitely can't make big moves without huge inordinate amount of risk, but if you're this small company and you realize something's not working, you should totally act on that, and a lot of what I do, I think, with teams that are sort of feeling like their product isn't really getting traction is I try to convince them to answer the question honestly. If you knew everything you know now, in the beginning, would you do something differently? And oftentimes their answer is yes. And I'm like, well then why aren't you? Oh, because we've already built this and we just launched, or, I'm like, it doesn't matter. It really doesn't matter. So I think that I'm a big supporter of pivots, of all shapes and sizes, and I think you have to constantly ask your question, is this working, and with what we know, now, like, would we make the same investment again? And until you're in the position where you can't make those bold moves, you should keep making them.
That's okay, right here.
Hey, Scott. So, um, I have a lot of friends that ask me this question, and I never really have a good answer for them, but, um, there's a lot of aspiring entrepreneurs, and obviously there's a whole lot of risk that you have to take to leave your job, leave that safety that you're talking about. And the question is always, how do I know my idea is sort of good enough? How do I know it's gonna work? Is there sort of a process that you went through originally with Behance or any of these companies that gave you that eureka moment that said, I have to go in full in? 'Cause I've also seen people that were like half in and then failed, not because their idea sucked, but because they were just halfway in?
I mean, honestly, the honest answer to you is that I always tried to hedge myself with a story. I was always— because I would love to tell you, yes, I took the leap, and I knew that this was worth my next few years, and I was determined to make it work. But the true answer is that I always was telling myself, what's the story I will tell if this doesn't work? And I was trying to always be comfortable with that. In order to allow me to take the risk I needed to take. Because we all care about our reputations and whatever else. I was also always measuring the opportunity cost. So there was a big part of my calculus that was saying, Scott, you're single, you have no dependents, the opportunity cost is lower now than it will ever be again. And I remember actually, and it's crazy to think about it, I remember how scared I was to leave Goldman Sachs. Even though I knew I didn't wanna be there, and I knew this was not gonna be my long-term career, there was still the safety and the, when I meet people in New York going out, and it's like, what do you do? And it's like, well, I'm trying to start something new. Oh, what? Something for the creative world. They'd be like, oh, great. And so there was part of me that was actually scared, and of course I look back on it now, that was crazy. I couldn't believe I was hesitant to leave, but I think that that's, So part of it is making yourself feel safe. And so the story I told myself was that I was gonna start this, and if it didn't work, I was just gonna say I'm going to business school and then sort of erase it. And if something worked, I would parlay it into maybe the book that I would write someday or whatever else. There was always that, and it helped me feel more secure with the different tries and whatever else. And then of course, I grew more confident with the idea as I got the team together, started to learn more about what we were doing.
And I think we have time for one more question. I'll let Kendall go ahead and decide. You talked about your team at Lance and how everybody was still there at Adobe afterwards.
It seemed to be a very tight team.
What do you think the secret sauce was for that? Was that your leadership style? Was that just hiring people who were equally as passionate about it as you? What do you think that was?
You know, it was a few things, I think. I think you have to hire people that have a genuine interest in what they're building. And so it was an eclectic team of people that all had this interest in what we were actually doing. Again, as I said, because no one joined us to get an exit, because we were very transparent with people that that's not what we were even focused on, and we never even really talked about it in the beginning. So it was people that enjoyed working together, which I think built a really good sense of culture. The other thing I always encouraged people to do was I always told my team, as we were in years into the business, I would always tell them that everyone has to move on. And what I meant by that is that when your learning curve plateaus, you either have to have a new role in the company or a new role out. And it started when we had our first departure, which was years into the business, the first voluntary departure, and I was really scared about the message it would send to the team. Because it was like, oh my gosh, someone just chose to leave. And I realized that the reason they were doing that is because they kind of felt like their learning curve had plateaued. There wasn't an obvious spot above them, and they were just doing the same thing for a year or two at that point. And so I really, I built this mantra of everyone's gotta move on. Hopefully you move on internally, but if you can't move on internally, you should move on externally. And so what it did is it kept the team engaged, and learning, and I really do believe that the reason someone takes the call from a headhunter or starts surfing a job board is because they don't feel fully utilized. It's, you know, in a decent team, it's not because of some crazy idea, it's just they don't feel like they're being fully utilized and being developed, and so they start to meander and consider other opportunities. But if you keep people deeply engaged and challenged, They'll just stay. Sometimes for less pay, because they feel like they're learning.
Well, before we say our thanks, I just wanna thank you guys all for coming. If you're not subscribed already, go to The Hustle, thehustle.co, and sign up, and you'll get notified for when we do this next. But we really, really appreciate you guys coming, and we appreciate Perisoma for allowing us to be here, and our sponsors. And Scott, you're the man. Thanks for having me. One of the reasons why we started our company, I think I said earlier, was we were heavily inspired by Scott and what he had accomplished, and we're so thankful that you joined us as an investor and even as a speaker, and we just really want to say thank you for coming and being part of this. So, and I think we'll hang out for a few minutes, but thank you all for coming.
