# The Ultimate Hiring Playbook: Five Questions to Ask Every New Hire

What Makes Truly Great Leaders and How They Give Feedback · Do VCs Really Add Value; Lessons from Hard Fundraises with Matteo Franceschetti, Co-Founder @ Eight Sleep

20VC · Nov 20, 2023 · 99 min · 21,232 words
Speakers: Matteo Franceschetti, Harry Stebbings
Source: https://www.996.fm/episodes/20vc--ep-3da59346/

## Cold open

**Matteo Franceschetti** [0:00]:

I always tell my executive, your job as an executive is not to be loved. Your job is to help your people achieve more than what they believed was possible. The most important thing is people should always know what you think of their performance. I will not take a meeting with anyone in the company if I don't get an agenda slash memo. I run all the interviews with the same playbook. I I go through each of your previous jobs, and I ask you five questions.

**Harry Stebbings** [0:25]:

This is 20 VC

## Intro

**Harry Stebbings** [0:26]:

with me, Harry Stebbings. And for early stage founders hiring teams, this is going to be the most valuable podcast you've ever listened to. In this show, our guest breaks down step by step their hiring process, the specific questions they ask, the best and worst responses, and so much more. Really is one for a notebook because it's very granular and detailed. Joining me is Matteo Franceschetti. Knew I was gonna get that one wrong, but just roll with it, Harry. Co founder and CEO at Eight Sleep, a company dedicated to fueling human potential through optimal sleep. Now to date, Matteo has raised over a 160,000,000 for the business from the likes of our Frank Keith Rabois at Founders Fund, Ryan Petersen at Flexport, Naval Ravikant, Kevin Hart, A Rod, and many more people.

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## Conversation

**Harry Stebbings** [4:04]:

Matteo, I am so excited for this. It's so nice to do this in person, so welcome to London. Yeah. Thank you for having me, and I'm excited to be here. I wanna start with we look at Eight Sleep now. It's this incredible brand. It's this incredible movement. Let's go back to the beginning. Why did you decide this was the problem you wanted to spend many decades of your life working on?

**Matteo Franceschetti** [4:22]:

Yeah. So when I was a teenager, I was an athlete. I was playing tennis and doing a bunch of other sports at competitive competitive level. So I have always been in recovery. And so around ten years ago, I started thinking why Elon Musk is taking me to Mars but I still spend a third of my life on a piece of dumb foam. Right? We have technology in two thirds of our life and then you suddenly go to sleep and you pretend to wake up eight hours later fully refreshed. That didn't make sense to me. And so that is when I started looking into sleep and decided to fix it.

**Harry Stebbings** [4:51]:

Kind of, it's such a big problem to take hold of. What was your next subsequent step? Like, I'm gonna fix sleep. What was the first prototype? Yeah. Just walk me through that.

**Matteo Franceschetti** [5:01]:

Yeah. So two thoughts. The first one is why there is no technology enhancing my sleep. Yeah. And that is what we are doing. Then even if I can compress your sleep, because I believe we will compress your sleep over time, so you might be able to sleep only six hours and get more rest than when you were sleeping eight hours. Six hours is still a lot of time for people like you and I. And so I started thinking, what else can we do? And then I started thinking, oh, we can save your life. We should use those six hours to scan your body and become the number one platform for health. You're standing still, flat, on a surface for six hours. We have lots of space. How can we keep adding sensors to really become the preventative health platform? We are already working on technologies for body scanning. We want to detect cancer in the future by using some of these technologies. So think of almost of an MRI. It will not be an MRI technology because obviously you cannot have it in the home, but we're working on that kind of thing in our r and d lab.

**Harry Stebbings** [5:56]:

I absolutely love it, and I totally agree with you in terms of six hours flat. It's still a lot of time, and so how do I use it? Question for you. I I saw this Jensen Huang comment the other day about NVIDIA, and he said, if I'd known how hard it was gonna be, I would never have done it. I saw that tweet. I was quite saddened by it. I was like, no. You're my hero, and I want to hear the inspiration. I share it with my cofounders. Yeah.

**Matteo Franceschetti** [6:18]:

Is it the same for you? 100%. If I knew what we would have to go through, I don't think any human being would do that. You need to be naive, and you need to believe that it's 100 x easier, and then you need to have the stamina while shit comes to handle it. What was the hardest thing? When you look back you're like, oh my god. I can't believe we went through that. What was that? So many things. I would say there are two major buckets. One, hardware. So I tell you this story that very few people know, but it was immediately after y c. Right? We just closed YC. We had our seed round, so that part was was going well. But what was not happening was manufacturing. We didn't have any expertise in manufacturing. Right? So we were really naive. And so at some point, I go to my wife, Alexandra, who is one of the cofounders, and I say, look, manufacturing is not happening. I need to go and fix it. And she says, oh, okay. And so what do you do? Oh, I'm flying to China. And she says, when? Tomorrow. And she says, when do you come back once I have fixed it? And so I came back a few months later after being there. Sorry. And she was okay with that? I mean, that's not a normal thing. My wife is you you have to do what you have to do. Right? And particularly for the company. If the company needs this, then you have to go to China, go China, fix it, and then come back.

**Harry Stebbings** [7:31]:

That is how it works in our family. My word, that's patience, my friend. Can I ask, was that seed round easy to raise? Respectfully, you weren't like Silicon Valley, Stripe, a software engineer, and you were fixing hardware, not a popular investor category, and like sleep, not an obvious category that investors invest in. Was it an easy seed round to raise? Yes. And I don't

**Matteo Franceschetti** [7:52]:

say yes easily because a lot of our rounds have been very, very, very difficult. The advantage we had at the time is that hardware was really hot at the time. There were a lot of campaigns in Indiegogo and other platforms. And so a lot of investors immediately after YC, because we already sold 6,000, 8,000 units in preorders, we were one of the hottest YC startups at the time. But that almost didn't happen anymore. So after that, actually, hardware became something that very few investors like in the valley because it's very complicated. It requires a lot of capital. It's very easy to screw up. And so after that, it became much harder to make.

**Harry Stebbings** [8:30]:

Do you think investors are justified in their hatred of hardware?

**Matteo Franceschetti** [8:33]:

They are justified 98% of the times. But I think if you find the right company and the right team, no. Because, I mean, look at Tesla and Apple. They are hardware companies. So if you wanna build trillion dollar businesses, hardware works. It's really, really hard to get there.

**Harry Stebbings** [8:49]:

So when you are analyze I'm now purely using this for my investing business. When you're analyzing a hardware startup and you're looking at the team, what is it that you wanna see? Is it, hey. You've been in manufacturing before. You know how a sausage is made, and you can build products. But is naivety good in building hardware?

**Matteo Franceschetti** [9:04]:

Number one thing you really want to analyze is how much they understand their unit economics. Meaning, as a company, we have been in trouble a bunch of times until when we really fix our unit economics. If those unit economics don't work, the faster you grow, the more you lose money. And then, other, you can have returns, replacements. So there are a lot of different factors. It's a very complicated business. And so you really need to understand, okay, do the unit economics work in this business or not?

**Harry Stebbings** [9:31]:

So when we say about the unit economics, is that in terms of, like, your bill of materials, which is obviously the cost it is to create the goods? What what how do you break down unitecom? Because you've got also customer acquisition by channel.

**Matteo Franceschetti** [9:42]:

Yeah.

**Harry Stebbings** [9:42]:

Yeah. Yeah. LTV, I guess, is a difficult thing to do.

**Matteo Franceschetti** [9:45]:

Yeah. Yeah. Yeah. Is a great question. You almost need your p and l at the unit basis. So, okay, what is your gross margin, which comes after the BOM and the COGS? Right? And what is included? And after that, that needs to really be above 50%. Above 50%? Yes. And probably best is 55, 60. Okay. And then after that, you need to have obviously, you have CAC. You have a credit card. You have returns and replacements. You have all that. And then, okay, what is your contribution margin?

**Harry Stebbings** [10:12]:

What would you say CAC is?

**Matteo Franceschetti** [10:13]:

Yeah. I think for great companies, I I know our CAC is really, really good. It needs to be below 20% of the price. Okay. But a lot of companies, you will start seeing they are thirty, forty, 50, and the reason is they postpone the payback period. So a lot of companies, they will tell you, oh, okay, I don't know, my gross margin is 30% and then I spend 40% because then I have a subscription and in twelve months I get the payback. Yeah. That most of the times doesn't work. And the reason is, substantially, you need to have enough cash for twelve months to cover that delta in the CAC. While instead at Eight Sleep, we have an immediate margin on day zero. So the more you sell, the more cash flow you generate and you become profitable. And we

**Harry Stebbings** [10:54]:

have been profitable for two quarters now. Can you take me to a time when unit economics was off and what you learned from that?

**Matteo Franceschetti** [11:02]:

I can can talk about that for for hours. Yes. There was a time where our gross margin was half of what it is now and our CAC was two x what it was now. We were air shipping units because of the demand. And so air shipping for a product like ours, which is fairly big, is extremely expensive. And so our units were upside down. And so what happens is you keep selling and you keep growing, but it becomes a vanity metric because you're really burning cash for every unit that you sell. And so that is the moment where if there is, you know, a recession or the market slows down, you're in real trouble because you can't raise. This is the typical example of growth at any cost. We just wanna grow. Yeah. We are growing three

**Harry Stebbings** [11:43]:

x year over year, but at what cost? The hard thing is you can also justify it in your head by saying, well, we can sell ancillary products to those existing customers.

**Matteo Franceschetti** [11:51]:

Yeah. This is always oh, and then I've reduced the BOM and the COGS, and then things will change. Thing things will not change. All you need to do is you stop, step back, and you say, now I take a hard decision and I change the price and I make this thing work and I set the cap to our CAC, which is what I did. Then you take a hit because growth stops for some time. You just need to believe in your team that within six months, you're gonna fix it and start growing again. It's a shocking time. I can tell you.

**Harry Stebbings** [12:20]:

How do you think about setting a cap to your CAC? A CAC, obviously, is customer acquisition, plus how much it costs to acquire a customer. How did you approach setting a cap to that? It's a very hard thing to do. Yeah. So Did you do it by channel? No.

**Matteo Franceschetti** [12:33]:

For you start blended. At least we started blended. And I came up with a hard number, and I say, now on, we don't spend a penny about this CAC. I don't care about what anything that is happening in the world. This is our CAC. Why? First, an internal decision, right? But I try to base it on a couple of things. First, okay, the top companies in the world, what is their marketing budget compared to their revenue? So you try to find the proxy. Second is also what is the CAC that I can afford to have this contribution margin? And so you almost go top down. If I wanna have 20% net margin on day zero, this is the CAC I can afford. And so you go to your marketing team and at the beginning they will complain, this is absurd, will never work, growth will fall apart. But if it fall apart, I give you six months, and then you need to start growing again because you need to figure out channels that work at this CAC. And we have done this two times,

**Harry Stebbings** [13:24]:

and it

**Matteo Franceschetti** [13:24]:

worked every time.

**Harry Stebbings** [13:25]:

Do you think marketing teams are ready for that? They've been so trained on a world of free cash that just brand marketing this Yeah. This this. That's I didn't feel that meant to

**Matteo Franceschetti** [13:34]:

You

**Harry Stebbings** [13:34]:

be

**Matteo Franceschetti** [13:34]:

know what is the biggest issue often, and it happened to us twice. I'm the king of mistakes, so I can't talk about any mistake. But then where you struggle the most is with executives. So you can find executives that have been at previous companies and they grew them, but it was a different time in the market where was growth at all cost. If you go to those executives and they used to spend, I don't know, $100 and now you tell them you need to do it with 50, within three months they're going to quit. Because they think this is unreasonable, this will never work, you need to reach this scale before you can start thinking about optimizing unit economics and all that. At the end of the day, it's all bullshit. No. You do it since day one. You build a business that is here to stay. You make it profitable and you figure it out. By forcing my team with this structure, we were able to unlock channels that we were not using at the time. And now we can deploy millions of dollars in these channels at an extremely efficient CAC. Which channels were you deploying heavily

**Harry Stebbings** [14:33]:

into which weren't wasted, which were not useful?

**Matteo Franceschetti** [14:35]:

There are a couple. More than anything, I would say the typical mistake you do during those days is you just deploy on the digital channels. Right? Oh, okay. Let me put money on Google and Facebook. Yeah. If it was that simple, everyone would be building a billion dollar business just by putting money on on Facebook and Google because it would become a commodity. And so what we did is we changed our velocity and pace in testing different ads on all these platforms. And so our Facebook or Google CAC now is back 75% lower than what it used to be two years ago. 75%. So it's massive. The blended CAC is around 50% lower. So this is the fourth year in a row where the company keeps growing and we're growing really fast, and the CAC is at the lowest it has ever been.

**Harry Stebbings** [15:20]:

So how do you use velocity to lower CAC? I know it's one of the principles that she'll get into, but how do you use velocity to lower CAC so much? Testing.

**Matteo Franceschetti** [15:28]:

So for Facebook and Google and the other particularly for Facebook, you test a lot of different assets. So the velocity of assets matter. And When you say assets, you're saying kind of imagery, wording, messaging. Exactly. And so if before we were doing one test every two weeks, now maybe we do five a week. And so you learn way faster. And then we unlock other channels that could be podcasts. Right? We we invest quite a bit in podcasts. We work with influencers, started some marketing campaigns. So we have sponsor Mercedes f one. So we call it the rule of the seven touch points. It's another rule I came up with which is substantially you want to surround your customers and you want them to see your brand seven times before they pull the trigger. Our purchase is not an impulsive purchase. Right? It's around $2,000. It's not that they are gonna see this product and they just buy it. And so you want them to see your brand seven times or you want them to hear about your brand seven times through friends. So word-of-mouth is really important for us.

**Harry Stebbings** [16:23]:

I get that in terms of the seven touch points. The hard thing is data attribution. You see them on the car when I'm in the gym and they have the TV on in the gym. You don't know that I've seen that. How do you think about channels where there's no attribution and you're really quite blind on data? Most of our channels,

**Matteo Franceschetti** [16:40]:

except few brand marketing initiatives, they have attribution. Right? The point is attribution will never be perfect, but there is where you just look at the portfolio, the blended CAC, and then there is no debate. How much did we spend? How much did we make? What is the percentage? Which channel have you been most surprised by? I mean, for us specifically, word-of-mouth is the most incredible. Right? Because you're still having 40% of the revenue just coming through word-of-mouth, and that is insane at our scale. It's a lot of money. So that is the biggest. And then I would say there are certain channels that work like for example, podcasts could be one. It's not a channel that works for every brand. So here is another mistake I think a lot of, not our investors, but there are a lot of investors that they always push you to reduce prices. Our investors, they're almost the opposite. And the reason why I think it's wrong to just be obsessed with price reduction and time is often your CAC will not change linearly with the price. Meaning if you reduce the price of our product by 20%, the CAC is not going to go down 20%. So what you need to do is keep that price, add value, but don't change it because our CAC is already so efficient that it's extremely hard to move it down. The key is keep CAC consistent and just find ways to generate more value and more margin. What have been your biggest lessons on pricing? You said it's a $2,000 purchase. It's a very considered purchase. Probably this one that whenever people if I talk to investors or even for future rounds and they start talking about, oh, but why don't you reduce the price to accelerate growth? I just disagree and because I don't think CAC will change. And so if anything, yeah, maybe there is a portfolio strategy where you have a cheaper product, but you have the current one and also more expensive. But I don't think sometimes people are sophisticated enough to understand the relationship with the CAC. Can I ask

**Harry Stebbings** [18:26]:

you

**Matteo Franceschetti** [18:26]:

a

**Harry Stebbings** [18:27]:

weird question? $2,000. What would happen if you made it $4,000? Have you done price experiments to understand demand sensitivity? This is

**Matteo Franceschetti** [18:35]:

actually the perfect question, and I can tell you wouldn't change too much. Yeah. Actually, going up with prices sometimes is very beneficial for a company like us. We just did it because when we had to readjust our unit economics, we had to increase prices. We did it in 2021 and the impact was minimal. And so one interesting thing for you to know is sometimes I talk to different people about this topic. And so when I want to talk about pricing, I talk to Italian very successful companies that have been profitable since day one. I don't talk to many Silicon Valley guys. And the reason is these guys they built, you know, one of our investors, the the founder of a major fitness company in Italy. Right? They make almost a billion dollar in revenue. They're worth multiple billions. So big business. Right? These guys started a company thirty years ago and never raised a penny until when they went public, blah blah blah. And so I talked to these guys because this guy is selling fitness equipment for 10 k with a profitable business that generates 70,000,000 in cash every year. So I wanna talk to him because he knows how to make the bottom line work, not the top line.

**Harry Stebbings** [19:40]:

I was speaking to someone at Chanel the other day, and they raise prices 11% twice a year, and they see increased demand. Yeah. 100%.

**Matteo Franceschetti** [19:47]:

Because it becomes way more aspirational, and people think correctly that if you raise the price, the quality is higher than other competitors. So you don't wanna get in the price war. Once you get in a price war, primarily with a physical good, you're in real trouble because

**Harry Stebbings** [20:01]:

then the the business will not work. We're gonna get to principles. I do just have to ask. You mentioned the rounds being hard to raise. Yeah. It's never a straight line. What was the hardest round to raise when you revert back?

**Matteo Franceschetti** [20:12]:

The the series a. Why was that so hard to raise? At the time, we were receiving a term sheet, but part of our business at the time was also licensing our technology to some mattress manufacturers. It was a sort of Intel Inside concept. And so there was this investor who already invested in the seed. They were interested in leading the a, but part of the investment was subject to signing an LOI with one of the largest mattress guys in the world. And then these guys, they call me and they say, we're out, the the the mattress guys. We decided not to move forward. And I had to call the investor and the investor say, Matteo, I told you, you know, this was a key for a key thing for me, so we're out too. And he was super fair, meaning I knew

**Harry Stebbings** [20:55]:

that that would happen. Are you not a bit like fuck you? And I mean that in the nicest way, it's like, believe in me. Why do you need an adult? It's a Series A. Like, we're not at the DE stage. Where's your belief in me and the vision?

**Matteo Franceschetti** [21:06]:

Yes. But they have always been upfront that that for them was really important. Right? The b to b business. They didn't believe in the b to c part. I immediately understood, but I still remember very clearly me and one of my cofounders, Max. Max smokes, I don't. And so we were downstairs in front of our office with Max smoking and talking about how much runway we had, and that we had a couple of weeks to fix it or we were in trouble. A couple of weeks to fix it? Yeah. Who came in and led the a in the end? There was another investor that we had called Yunchies. It's a very large investor. They help us with China to create the manufacturing. So we went through all that, and then Keith led with Khosla, and then Founders Fund, and then Valor.

**Harry Stebbings** [21:49]:

There was like a plateau in Eight's history in my mind in terms of brand perception, And then it suddenly ramped. Yeah. And I don't know why it suddenly ramped. Why was that for you? So when Keith

**Matteo Franceschetti** [22:01]:

led the round with KV, with Khosla, that is when we really rethought many things, including the brand. We rebranded completely and we created this concept of sleep fitness. We decided to go up with prices and premium positioning. We created the Pod. Right? So the current product that is 100% of our revenue launched literally four years ago, 2019. So this thing went from zero to hundreds of millions in revenue in four years, which in hardware is really rare. But the previous products were completely discontinued. And so if you look at the companies like the scared to do that. Mhmm. It's a big decision to discontinue. Yes. But at the same time, we wanted to play bold. I think having people like KV and and Keith and there was also Delian behind your back and supporting bold decisions gives you a lot of confidence. Because it's not, oh, am I smoking something about this vision?

**Harry Stebbings** [22:56]:

No. If these people believe it People are like, you know, do investors really add value? Do they really add value? Did having Keith for KV, subsequently Founders Fund, did that change your ability to hire, do you think?

**Matteo Franceschetti** [23:08]:

Yes. And maybe it's not 100%, but I think there are multiple gems that we have in the company that join because you have these people behind. And so they just say, okay. This vision must be real if these people are behind these guys. So you think investor brand really does matter? Yes. I know for sure. Meaning, some people apply to us because maybe they saw a tweet from Keith or some others applied or they joined because they knew that Khosla, Keith,

**Harry Stebbings** [23:38]:

Founders Fund, Valor, and Antonio invest. When you revert back to, like, the fundraising journey, is there anything you know now that you wish you'd known then where you'd advise founders having been through all that you've been through?

**Matteo Franceschetti** [23:49]:

Yes. Sometimes you just think about the firm, meaning, oh, I'll let me try to talk to Founders Fund to see if you can raise. But if you have a very bold vision and a very contrarian view of how the world will look. Right? And so you really need to talk to the right person in the firm and usually is senior partners or people that now fully understand what you're trying to do. And the other big thing is this. If you look at our history, right, we we have some of the greatest investors. Right? We have Keith, we have, you know, Khosla Ventures, we have Founders Fund, Trae Stephens, we have Valor with Antonio Gracias. Right? And what I realized is not a coincidence. Hundreds of people passed on us, but not these guys. And the reason is these guys, they have a vision that someone will master sleep. Technology will dominate sleep at certain point. So I don't have to convince them on that. Right? If you talk to Keith, he already knows. He he has been talking about this for ten years. And so I don't have to convince him that technology will, can enhance your sleep and there will be a trillion dollar business in the space. At that point, it's a matter for these investors just to understand, are you the right team to do it or is there someone that is bad? Well, instead, when you talk to some other investors, they don't have this belief of how the world will change. And I have to convince them that this will happen, and that is where I lose them.

**Harry Stebbings** [25:09]:

I do sympathize because I totally agree with you in terms of you don't wanna educate the investor. When you're educating investors, it's just it's too hard to sell. And I buy the long term vision, and I see that. But then you also have to be grounded in reality and grounded in unit econ and aware of ancillary products you build out, expanding LTVs, and that's where I think the dislocation can happen.

**Matteo Franceschetti** [25:30]:

Yeah. But I think some of the greatest investors, if they believe in you as a team, they know you will fix it. Fixing unit economics is possible. It's human. Hard work of an operational excellence. And so you just need to hire the best people, and you will do that. Yeah. But will the world change and adopt a technology that improves sleep? Yes or no? That is something that they just need to have a gut feeling.

**Harry Stebbings** [25:54]:

Okay. I wanna discuss the principles because we kinda touched on them a little bit. You mentioned operational excellence I just wanna start on the first one. And by the way, these are the principles of world class execution. Yep. Expecting a book coming out soon, I hope. Clarity of thinking, Matteo. What does that mean to you, and how do you try and make your clarity of thinking as optimal as possible?

**Matteo Franceschetti** [26:13]:

It's something I would really obsessed about. First, the best way to develop clarity of thinking is writing. Right? You need to write. Once you start writing your thoughts, you understand there are many things that are not clear or that you still don't know you didn't develop. But clarity of thinking is this ability to distill in very few words a complicated concept. There is an area where I challenge my team and myself a lot because are you supporting your thinking with data? Second, what is the clear outcome? Sometimes people are, if they don't have clarity of thinking, they can write something that is very confusing, is not data driven, and you don't get to the endpoint. And so it's just a matter of practice. And you see people like Paul Graham or Keith Rabois, right, they are some of the greatest at expressing a very complicated concept with few words and something that I call it the grandma rule. That's something that my grandma could understand. Sometimes, you know, my team writes me something and it's extremely complicated, and I just say, okay. Can you explain

**Harry Stebbings** [27:07]:

this to my grandma? It's a really hard one, I think, for you in terms of, like, the grandma rule and where you position the brand because you want this, like, we turn everyone into a superhuman, but you don't want it to be too aspirational that it's out of reach. Do you see what I mean? Yeah. How do you make something accessible but aspirational?

**Matteo Franceschetti** [27:25]:

For aspirational, you use images. Right? And you try to position very premium, something that you really dream of. But in terms of words and the value proposition and the benefit, you need to be very simple. And so there, I always think of you having dinner with a friend tonight. How are you gonna explain my product? And there is where now we keep tweaking and tweaking and tweaking to help you pitch our product tonight. Why do you think people make mistakes on clarity of thought? Because they didn't think enough. They believe they have a thought, but they didn't develop it properly and they don't have enough data to support it. Mhmm. So they're confused. At the end of the day, the opposite of cognitive thinking is confusion. You have a blurred concept that you're unable to express. Oh, we wanna try this channel. Why? And why? And why? No, the five whys. Keep going deeper and deeper and deeper. Do we need to test it now? Think of this, right? They it just happened, right? They were suggesting, okay, let's test these other channels. And my point is, why? International market. We didn't test it in The US, why would we go there? Oh, because then we, I don't know, we can grow faster. But can we grow faster with all the current channels and just kill them more? Yeah, maybe. And did you spend enough in these channels and do you already know that there is no margin for incremental CAC? You keep making questions. As a team, need to help each other, meaning you will never start with clarity of thinking in anything, so I need help myself. This this is just an example where as a group, we develop our clarity of thinking. But after you debate this, write it down and send me a blurb or a one pager about this topic.

**Harry Stebbings** [28:53]:

Mine is, like, a focus. I always tell people, like, write a list of the top three and then just start from one. Yeah. And then also, it's, understand what success is in each. I find so many people try things and they say, I don't know if it's actually what we thought it would be, it's like, well, what did you want to achieve? I don't know. We didn't set that. How do we know whether we should keep going? It's a

**Matteo Franceschetti** [29:10]:

great point. The other way is, yeah, maybe this increases your revenue, this new channel, but is there a faster and simpler way to achieve the same that works for now? Sometimes people come to me and they just give me one option. I suggest we do A. It doesn't matter if I'm in favor or against A. I never like to see one option. I want to see multiple options and you tell me why we are not pursuing the others and we are pursuing this. I want a picture, portfolio. Pick one based on impact and effort.

**Harry Stebbings** [29:36]:

I get you, but I also want speed of execution. And so I quite like it when someone says, hey. I analyzed all the options, and I realized that actually this is the most efficient. Are you okay for me to proceed? I like that because the speed of execution means I don't have to go, oh, wow. We've got five. We should debate. Well, I disagree with that one, actually. Yeah. For us,

**Matteo Franceschetti** [29:53]:

everything happens in writing async so we don't lose time. Write it down. Just say, oh, I analyze five option. I recommend option c. Cool. Can I read it? I read really fairly fast, and within literally five minutes, I can give you a thumbs up, thumbs down. And even async, we don't even need to jump on a call if we're not in the same place.

**Harry Stebbings** [30:11]:

Do you find you lose tone? Like, I have with my CFO in particular. There's some sensitive items, budget items. I thought we were not tight as we could be, and there's some sensitive things. Do you ever pick the phone up and call people and say, hey. I feel this one actually needed to be on the phone?

**Matteo Franceschetti** [30:27]:

Yeah. I would say probably 20% of my meeting is is impromptu, and so I just randomly call. And so I actually allocate time in my daily calendar to make sure that I have bandwidth to just randomly call my team and discuss things.

**Harry Stebbings** [30:41]:

Speaking of bandwidth, another one is operational excellence. It's kind of a bandied around term, very popular. How do you think about your own operational excellence and what are the biggest needle movers have been and what you've done to optimize it?

**Matteo Franceschetti** [30:52]:

Operational excellence to me means output. Right? So what is the output and the efficiency of this output? And so there are a couple of factors behind that. The first one is quality and the second is velocity. You need to keep a very high bar in terms of quality at a very high velocity. And then you have this output. And the output there is actually some example from Keith Keith Rabois. Right? Output usually is a function of how many barrels you have. Barrels are people in your company that can get everything done from zero to completion. Right? And you have barrels and ammunition. Barrels can lead anything from zero to completion. Ammunition supports them. Usually, the output is a function of this. You can do as many things based on the number of barrels you have. If you have five barrels, you can usually do five things. But the key of these operational excellence is how do you make sure that you keep moving really, really fast without compromising quality. And so they are opposite metrics and you challenge them against each other. What's the biggest challenge of having them advertising each other? It's the best thing ever. And actually this is a mistake a lot of companies do when they pick only one metric. I'll give you an example in growth. In growth my team has a goal to grow, call it two x a year over year at this CAC. There is a tension between these two, but this tension is exactly what they want. Right? Because if you just give them growth, they could grow five x year over year. They just spend five x more CAC or three x more CAC. If they just use CAC, then they're not challenged to figure out how to unlock new channels that can push our growth. And so opposite matters, if we don't do anything at Eight Sleep, it's there is not an opposite metric. What

**Harry Stebbings** [32:21]:

mistakes have you made with operational excellence? When you look back now, and you're like, oh, I can't believe we did that.

**Matteo Franceschetti** [32:27]:

Most of the times, it's probably connected to the opposite metrics. Like, you wanna ship quality of software. Sometimes, now, we wanted to improve the quality of our software to make our software more reliable. But then what happens is it starts taking months to ship a new feature. Or another example is focus. Right? Sometimes my engineers or the head of engineering says we cannot address a bug we figure we found last night. This can happen in two weeks because the team is already focused on this pipeline of products. And my answer is no. We need to do it today. I I give them forty eight hours. Right? So usually, if if something come up, we need to fix it within forty eight hours. If that doesn't happen, we must have a very strong reason, and I wanna read about that. You always want to find this balance between these two opposite parts of the business.

**Harry Stebbings** [33:14]:

You mentioned, like, the forty eight hour turnaround there. I often think about speed of execution and velocity. Yeah. Part of me says it's the most important thing in a business, and I do think, especially in zero to one, it really is on the testing and iterating side. And then part of me thinks, actually, some things need a lot more deliberation. How do you think about is speed of execution as important as everyone says?

**Matteo Franceschetti** [33:33]:

It is without compromising quality. So yes. And then you said the opposite metrics of quality.

**Harry Stebbings** [33:38]:

Is it possible to do without compromising quality? If I can do it today for you and it's 80%, or I can do it in a week for you and it's 90%, percent. Which do you want?

**Matteo Franceschetti** [33:46]:

So I want the 80%. And so there is where you need to be clear. It's also one of the points of the Elon Algo on in his book, right, about simplifying the requirements. So it's the definition of quality. Quality to me is not perfection, but there is a threshold where if you just ship tomorrow shitty up, then we don't go very far as a brand. Right? But if it's 85% there and then you keep improving every single day for the next week and you take it to 100%, 100% we should do that. So it was actually this point that they taught us at YC where they if you were going to the YC partners during the YC program saying, oh, I'm going to launch, I don't know, this website in thirty days, some of the partners, they would tell you, no, you start shipping something tomorrow and you break that thing down in 30 pieces, and every day you make some progress. We really talk about progress at Eight Sleep. How can you do as much progress as possible on a twenty four or forty eight hours? I

**Harry Stebbings** [34:35]:

do wanna just dive into that because I think RAM perhaps did it very well in terms of velocity. They have, like, at the top of every door, like, day 628. Yep. How do you think about deliberately building velocity into a company? I think it's literally part

**Matteo Franceschetti** [34:49]:

of the culture. We call it Eight Sleep Speed, Eight s Speed. When we do something really, really fast, we celebrate that. And I immediately jump in and I also hashtag Eight Sleep Speed. We want to do what any other company does in half the time. The key usually with senior executives where you really need to push them because, in particular, if they come from big companies, are more skewed towards quality and reliability. While instead, you wanna be bold and just ship something 80%, take the risk, move on, and you need to create a culture.

**Harry Stebbings** [35:18]:

Have you ever had it where it's not been good enough and you're like, hey. This this is shit work.

**Matteo Franceschetti** [35:23]:

I

**Harry Stebbings** [35:23]:

wrote an

**Matteo Franceschetti** [35:23]:

email about this last Sunday to all my executives, and I say, I want to increase our pace by 30%. And tomorrow, we're gonna discuss this. We had our internal executive meeting. Everyone reads the memo. They read the memo before the meeting. We debated the memo. By the end of last week, so last Friday, everyone took action in changes with their team to increase velocity 30%.

**Harry Stebbings** [35:45]:

How did they respond? Were they like, oh, Matteo, that's that's a lot that we're we're pushing our hardest now. How was the response? At first, it was mixed.

**Matteo Franceschetti** [35:53]:

Right? Some people say, okay. This guy just keeps pushing for for velocity for the sake of velocity. But by the end of the week, 100% of them, they were 100% in. What

**Harry Stebbings** [36:04]:

are the most significant things you think the team will do to reach that 30% speed

**Matteo Franceschetti** [36:09]:

increase? The bigger thing is what I told them is they need to stop being too rigid on biweekly or monthly goals. If they're too rigid on that, when things happen and in a startup things happen every day, they are not agile enough to fix them. So let's say we discover a bug today. That bug needs to be fixed tomorrow and it cannot be, oh, but we have this roadmap and we are shipping this engineering feature and we can do it in two weeks. No. They do it tomorrow. And so you need to talk to your engineers and they need to understand the importance of fixing this, right, for a brand that is premium and is positioned at $2,000. That is the number one thing. We are sometimes too rigid with our schedules. Did they resonate with that? After I explained and gave examples, because then what I did in the memo, I gave good examples and bad examples. We had an executive meeting. Sorry, an executive off-site four weeks ago. I created another memo about a product that we're going to launch. This was new. But I think the case is pretty strong and it's pretty obvious. Everyone understood, okay, now this this makes sense. It's not just a material idea. Then they say, when do you want that? And they set a very aggressive deadline. The first answer for the first five minutes is, oh, it will take us a month to validate all these things if this is possible with our data. And I say, that doesn't work. We don't have a month to validate. How can you validate it in three days? Then they started thinking and say, it goes back to the Elon algos of simplifying and reducing requirements. Okay. We don't need 100% certainty on that thing. Maybe we need 80, and for 80% certainty, we can just do a and b tomorrow. The same across all the different teams. And by the end of the week, we had a full plan, and we have validated everything.

**Harry Stebbings** [37:48]:

How does the requirement for perfection or close to perfection change when you're comparing needs in hardware versus software? Software is obviously retraceable. Ah, fuck. Bug. Let's replace it. Hardware. Ah. Yeah. Shit. How does that

**Matteo Franceschetti** [38:04]:

change? It changes. You will never have 100% confidence when you ship hardware that everything is perfect. You will always discover things that you didn't know. And so a certain point where you need to flip the narrative is about learnings. The whole reason of velocity is not velocity for the sake of velocity, is you need to learn as fast as possible so then you can adjust things as fast as possible, which goes back to the point where if you are too rigid with very long term roadmap, that doesn't work in a startup. When we switched from the to the cover, which now is 99% of our sales, we did it in three days. And we didn't have a cover, but we had the wrap for the mattress and we had the cover, and we wanted to see how customers would react to that. And this thing immediately became 23% of the sales even if it was hidden in accessories. And so I always push my teams, can this help us learn faster? And if the answer is yes, go and be bold and take the risk.

**Harry Stebbings** [38:54]:

Can you take me to a time on both sides? One where being faster has helped you, and another where being faster has hurt you.

**Matteo Franceschetti** [39:00]:

Where it helped us was the cover, one

**Harry Stebbings** [39:03]:

of the mass biggest

**Matteo Franceschetti** [39:04]:

win of the business. Now sometimes we we have a subscription. We could have launched the subscription in a way where we could have tested more things before and could be more sophisticated, but there we did it immediately after we launched it. And so we could have done it a month before instead than a month after.

**Harry Stebbings** [39:20]:

Can you change pricing? People are always like, oh, it's very hard to go up and change pricing. So you disagree with the notion you can't go up and it's difficult.

**Matteo Franceschetti** [39:28]:

100%. Disagree. I think we overthink because the whole point is you're a star. How many people really know your brand? Even if you're big, even you know, you're not Apple. Don't fool yourself thinking that you are that big brand. Then what you need to be aware is there is a lag. Right? So if you change price, there will be customers that saw your product for the previous thirty days, sixty days. Right? And they saw a certain price, higher or lower. Like for example, in our case, we tested different on the product. Right? We have seen for x period of time people saying, oh, but what about that warranty? Everything you do, you can do it the same day. You just need to be thoughtful which will goes back to clarity of thinking about thinking the second order effect. Will people ask these? What do you answer? Did you train the customer support to have an answer? So there is where you just need to be thoughtful, but you can do everything today.

**Harry Stebbings** [40:16]:

You mentioned, like, executive off sites. You mentioned getting everyone aligned in terms of moving 30% faster. Teams are the hardest thing always. What have been your biggest lessons in terms of talent management?

**Matteo Franceschetti** [40:26]:

I mean, I think one of the biggest lesson is you really need to pay attention with when you hire executives from big companies. I think this is something really well known, but I made mistakes there too.

**Harry Stebbings** [40:37]:

What are those mistakes that you would tell me as a young startup founder listening who sees shiny logos from Apple and Tesla and SpaceX and goes, wow. What would you tell me knowing what you know now?

**Matteo Franceschetti** [40:46]:

So first, even if these people were really the the successful drivers of other in in other companies, right, which which could be possible, you wanna make sure that first the historical time of when they were successful is still similar to yours. It goes back to what I was telling you. Right? If you find people that were able to scale a business from 100,000,000 to a billion, but at the time where it was growth at all costs and they join your company, your company is designed around CAC efficiency, it will be really hard for them. Right? They have already been successful, probably they already made money. They have their own playbook. That playbook doesn't work for you. So you need to find people that were really successful at scaling businesses with a very efficient CAC. That is a different game. The second is, if they come from very large companies, their requirements compared to a startup are very different. We are pirates. They are the Navy. These people need to be able to launch a new product in two days just because they want to test it and be fine with the customer reaction. If they start thinking about the brand, the brand impact and this this and that, you need to be thoughtful. But you need to take some risks to learn faster. And maybe they reach a point where they were not anymore because that company was way bigger. And it's really hard to reverse back if they have been there two, three, four, five years. And then sometimes some of these people, what I have seen is if they have already been successful, if they made money, you know, maybe they are at a different phase of their life. Instead, in our company, again, we are pirates. Man, if you need to work on Saturday and Sunday to ship your thing and test it and and it's a bold move, you have to do it.

**Harry Stebbings** [42:15]:

How does your hiring process look as a result that? Like, how do you structure it then to test for those? So

**Matteo Franceschetti** [42:21]:

we made a lot of mistakes in hiring too. And I could met anyone who's like, oh, we did it well from day one. So the first thing is we accept to be slow at hiring. And slow not in terms of the process, in terms of the steps, but we have a bunch of steps. The second thing is everyone has to do homework. Anyone who joins the company, we give them a project. They need to work on that at home and they will present to a panel. I don't care if you are the senior executive and you are the the CFO of Amazon. If you want to join Eight Sleep, you have to do your homework and we give you a few days and a very complicated project and you will present. If you don't want to do it, it's fine. For us, it's a way of selection. Right? Because it it shows how committed you

**Harry Stebbings** [43:03]:

are. And just so I get an an understanding of this, this is a task that you would do in that role. Usually, it's a problem

**Matteo Franceschetti** [43:09]:

we currently have in the function. Uh-huh. So we also learn what is your perspective, and it's actually like your first day of work.

**Harry Stebbings** [43:16]:

Okay.

**Matteo Franceschetti** [43:16]:

This is a problem you would face the first day of work. Put it together. Put your thoughts. Put your strategy. Show me the data, show me your clarity of thinking. Have you ever had anyone be like, kiddin' me? Was a

**Harry Stebbings** [43:27]:

principal engineer at Tesla.

**Matteo Franceschetti** [43:28]:

Yeah. Particularly, know, sometimes executives, then you're surprised. Sometimes the recruiters say, oh, this person will never do it. They are a senior executive at Tesla. The good people, 100% of them, they do it. And they get excited. So that is one. When you talk to a person at Eight Sleep, there are three ratings. There is pass, hire, and strong hire. We don't hire anyone if there are not three strong hires. It's hard rule.

**Harry Stebbings** [43:51]:

So three strong hires on the voting panel for that. Yeah. The the people that they spoke to. How many touch points are there with the team? Is that three out of ten, three out of five, three out of 15?

**Matteo Franceschetti** [44:01]:

It's probably somewhere between three out of five, three out of six. So

**Harry Stebbings** [44:05]:

it's kind of at least 50%, so it's strong hire.

**Matteo Franceschetti** [44:07]:

Yeah. And the other thing, and this is more mental, is we are a default and no hire. The default is if you come to Eight Sleep, we don't hire you unless you really blow our mind. The reason why this is helpful is, I don't know, one of my executive recently came back and said, oh, there is this engineer, has a great pay degree, and I work at this company and that company. I'm not a strong hire, but I think I can draw this person into the role. And I say, no. We are a default no hire. So unless you are extremely bullish on this person that you believe it would be dumb to let this person go, we don't hire. We just

**Harry Stebbings** [44:41]:

stop here, the process, and we move on. You mentioned kind of the being slow there. I get it, but sometimes you just have to hire today because you you need a seat filled and you need to actually start doing something. How do you determine just kind of rush to hire and just get someone in the seat because they need to versus now? It needs to be the right perfect hire.

**Matteo Franceschetti** [44:59]:

We hire really fast in 2019. I would say we probably screwed up a large percentage of all the people we hire because we had that approach. What we learned is the pain that you go through if you hire the wrong person is probably 10x bigger than delaying the hire by a couple of months. And so the way I look at this is in different buckets. One, I measure the top of the funnel of each executive and I see how many interviews they do per day, per week. And now I start having a baseline on my mind of how many they should do, how many people they should interview. But more or less we hire a person every 100. If they start telling me, oh, I'm struggling. I don't find this engineer in San Francisco for mechanical engineer blah blah blah and I see that they just did 30 interviews, it's just math. On an average, hire one every 100 people. If you didn't see 100 people, you're not going to hire. It's not going to happen. That is how you create velocity. And then also I measure the steps. How long does it take to go from step one to step two? Is it forty eight hours or it's taking you a week? And if it's a week, why were you so late? It's so slow. So there is where I create velocity. But then in the selection of the candidates, man, the bar needs to be incredibly high. If you, as executive, are not strong hire, why are we hiring this person if you're not bullish? Would you take a flight to China with them and spend a week with them? Would you have fun? If no, that's the whole point. Would you be excited about having a one on one with them? If no, what's the point? That is one. Second, are there other people in the company that believe what you believe and so they are two more strong hires? If not, I love you but we are a default no hire and so I assume no. And then there is my final step which is still fifty fifty. And sometimes I feel so bad as a CEO, but if I don't click culturally with the person, I still pass. And I'm close to 50 pass.

**Harry Stebbings** [46:44]:

Does that cause dissent? If I'm working for you and I go through all of these steps, we go through the panel, they're great. I need this in my function, and he, she is great. And then, like, you don't click? I mean, the

**Matteo Franceschetti** [46:56]:

definition of click, let's expand it. So I send you a bunch of bullets with pros and cons. I try to be very detailed, particularly when I pass because I don't want this to look like, oh, Matteo was in a bad mood and he just said to pass. Right? I have my premade playbook of how I run these interviews. Right? And I run all the interviews with the same playbook. And that helps me because now I have seen thousands of candidates with the same playbook, the same questions. Right? And so I can identify certain red flags faster. What is the playbook? I I go through each of your previous jobs and I ask you five questions. How did you find the job and what did they hire you for? So that helps you because in how you find the job if they had five, six jobs. You want to see if they were recommended by anyone or the previous managers. That is a great sign. Right? If it never happens, it's not a red flag but it's not a positive sign. Second, biggest achievement. Biggest achievement seems a stupid question, but it's one of the greatest questions because if you start talking to me about, oh, I bonded with my people or my teammates, I assume that you bond with the other teammates. I'm talking about what has been the biggest achievement, your biggest contribution? You, not your team. And the best people come back with data. I improved the CVR of the website from 8% to 9.2 by doing a, b and c. That is a great thing. If they're fluffy, third question is what has been the lowest point? And this is another great one because a lot of people, they start complaining and you see what they complain about. Oh, my manager, they never give me the right task and this and that. Or they didn't give me enough freedom to operate, blah blah blah. Then you ask, who was your manager and what are they going to say about you in the next reference check? But you want to say in the reference check because they can lie because they know that you will do the reference check. And so there you immediately see certain people becoming rigid. You know, I mean, we had a good relationship but it was not really perfect. My manager And the last one, why did you leave? And there is a soft way to know, did they push you out? Was it RIFF? And when you start doing for five jobs, five, six jobs, you start seeing patterns. And so when I go back to you as an executive, it's not Matteo's opinion, is I come back with a list because I take notes and I saw x red flags. And at that point, they trust me. How long does that take? This is another great question. With the great people in twenty, twenty five minutes, I can go through five jobs. They'll pass. There are some people where you go through two jobs in thirty minutes and that is another red flag because they Fuck. Fuck.

**Harry Stebbings** [49:20]:

I have it sometimes at half an hour, and they're like, and then I went to Stanford, and you're like, oh,

**Matteo Franceschetti** [49:24]:

no. Yeah. Yeah.

**Harry Stebbings** [49:26]:

So we have that. I hate bounces, I call them, which is, as you said a couple of times, five, six jobs. I'm like, if you were somewhere for a year and a half and another for two years and another for a year and a half, with ramp time and leaving time Yeah. You basically did six months of work. Correct.

**Matteo Franceschetti** [49:42]:

I look at that a lot. That is why it's really important to understand how they found the next job. Meaning, if it was your former boss that gives you the opportunity of a lifetime, you live after eighteen months, I understand. Right? If there was a RIFF, fine.

**Harry Stebbings** [49:54]:

I this is gonna be very unpopular. If it's a RIFF, does that not show you that you aren't crucial?

**Matteo Franceschetti** [50:01]:

I think of that, definitely. I think even though you wanna see a partner, I see sometimes people that have been part of three RIFF. That's it. But you know what what you need to think there is, how did let's say there is a RIFF after a year or even six months sometimes you see it, and you see this happening multiple times in their career, like three, four times. Then what I start questioning is how did you judge the company? Why did you pick this company? Right? There is that part of judgment that is key in their career because it means they are thoughtful about what company they're joining and why. Then the company can fail. If you tell me, oh, look. I wanted to join a space company and it was forget SpaceX. Right? And then they failed. But I have been a dreamer of space for all my life. I get that. But if you get a company that is maybe debatable and it was really tiny, and you came from Amazon and you went to the you know, it just makes no sense. There is another area that I judge a lot.

**Harry Stebbings** [50:53]:

How do you feel about title? What are your lessons on how successful a hire is correlated to their negotiation on the title that they want or have? So usually, it's bad.

**Matteo Franceschetti** [51:02]:

Some of the best people, they don't really care about title. I understand that some people, you still wanna go home, you to your partner, to your friends, and, you have some pride of what is your title, in particular, if you're moving. We had experiences where when we were hiring bad in 2019, a certain point, the VP of engineering changed the title of an engineer, and this guy started coming in completely dressed with a t shirt and a tie the following day thinking of being a manager. And he was managing, like, I don't know, one or two people. So it literally made no sense. So the story there is you need to pay attention, meaning sometimes you can play with titles. I don't like it 80% of the times. You can do it. But it's less about the title and making it clear that you're still an IC versus a manager. And we don't make anyone a manager unless they already led a bunch of squads successfully. So my step is you will never become manager immediately, right, going from IC to manager. You need to be a manager before you are formally a manager. Mhmm. The easiest way for us, we our teams are structuring squads. There is the engineering team, there is the product team, and all that. And then they work in squads. So maybe there is a PM, there is two engineers, and there is a designer. Right? And there is a squad lead, the person who is leading that micro business unit. I wanna see you leading one of those things or at least be part of the leadership of that squad successfully before we ever talk about you being a manager. When can you play with titles? After multiple years, after an insanely great performance, so you need to be, you know, every six months or twelve months that you have your performance review, you get rated on all these principles. So for each of them, strong, medium, low. And if you are a top performer in the company, probably you're at the point you're not asking for a title change. But if you do, that is the only case when we consider it.

**Harry Stebbings** [52:49]:

I think a lot of people, and I mean this respectfully to you, will be listening to this a little bit daunted because there's a lot of founders who are listening who go, shit. I don't have any of these frameworks or playbooks. Did you have them from day one, and can they be implemented halfway through?

**Matteo Franceschetti** [53:02]:

Yeah. I didn't have them since day one. I literally spent a lot of time studying on a weekly basis. Right? I really studied the best. You will see that a lot of the the the things I share, for example, they come, don't know, from people like Keith or others. It it depends on on on the subject matter, but it was developed over time. Because but it makes the difference. Would you say the playbook is the most important one? Yes. There is one we didn't cover yet that is writing. Obsessed with writing, at least.

**Harry Stebbings** [53:29]:

Well, I discussed writing after this one other one that I just have to pay. What have been your lessons on pay? When to move? What it can indicate? So we

**Matteo Franceschetti** [53:37]:

do it

**Harry Stebbings** [53:38]:

every year for people.

**Matteo Franceschetti** [53:39]:

I don't think we are very sophisticated on this. So whatever I say, I think it works for early stage companies. I think we need to raise our bar on this. But what we do today is we have three levels of compensation increase based on you're a top performer, you're okay, or there is no change if you're a a low performer. If you were a low performer, no change. Should you not Yeah. Moved on? Yeah. That would be the first thing I would discuss with the executive. Right? And the reason is is not because you wanna be, you know, you don't wanna be fair. Actually, you want to be fair. So what you need to do there is first you need to talk to the person. Right? Because if things are not working, there is always a why. Most of the times, people are not bad. And so maybe we're not the right fit, normally as a culture or as a product. Maybe we're not the right fit for this time of their life. Right? We are very intense as a culture. And so if you're not intense, if you have other things going on in your life, we should respect that. But at the same time, you cannot be frank with everyone. I always tell my team. Right? So you need to pick your friends. Talk to them. Give them an opportunity to improve and raise their bar. If they do it, that is success to me. If they don't, then

**Harry Stebbings** [54:43]:

we we need to part ways. I think one of the big mistakes I see a lot of founders make is they're like, you know, Matteo, he's not great actually here, but we moved him to this other side of the business where he's actually quite good, and that works. And I always ask the question, forgetting the existing relationship with Matteo, if you were hiring for that new position that he was in, would you have hired him against the other candidates?

**Matteo Franceschetti** [55:03]:

Correct.

**Harry Stebbings** [55:03]:

It's like

**Matteo Franceschetti** [55:04]:

And the other difficult mistake is people come back, and what they say is, I need three months, so I start looking for a replacement. I still need some help here. At the beginning, I was accommodating that. Now I I became ruthless. I said, no. If you spoke to the person, if you gave them the time to adjust, and if that didn't happen, now you pull the plug. And the reason is, first, you need to let these people move on and find the right job. You need to be respectful. You don't keep hem hanging and you already know that you want to look for someone else. And second is if you don't let the person go, you will never move on to really find the right partner. Treat them fairly. Give them an opportunity. If we can help them, recommend them in other companies where they think they're a fit, we do. You need to find someone who is the top 99, the ninety ninth percentile for the job.

**Harry Stebbings** [55:51]:

Writing. The only thing I write, Matteo, is tweets. Very, very good at that. I think so much. You know, I I I've crafted it over many years. Let's just start with, like you said before about the importance of writing. You said it's so important for clarity of thought. Help me. Why is this so important? I will

**Matteo Franceschetti** [56:08]:

not take a meeting with anyone in the company if I don't get an agenda slash memo. We call them agendas, but they are memos. It could be from a one page or a half a page. But an average meeting, it could even be five pages. We have a weekly growth meeting where we review all the data from the previous week. As there is multiple pages with with all the data, obviously, they come from the dashboard, there is a bunch of thinking about what is happening and why. So I'm not gonna take any meeting. You can't schedule a meeting with me if I don't get an agenda. I get all the agendas the night before. What makes a good agenda versus a bad agenda? Massive difference. And usually, probably takes at least six months to develop someone to write an incredibly good agenda. Because the best agenda, they're shorter. They go straight to the point. They're data driven, and they're very clear.

**Harry Stebbings** [56:54]:

Do they posit opinions? Do they posit like, do they say where they want to get to at the end? Like, how are they structured? And it sounds weird. So

**Matteo Franceschetti** [57:02]:

usually, there is an executive summary at the top Mhmm. Which is the summary of the key topics with the key data. Then there is points to be discussed. And then usually there is the real meat. And so this is usually based on OKRs or goals. Our goals usually are monthly, four to six weeks. And so let's say you have a goal to grow 1.4 x, grow to improve CVR, and goal to reduce CAC. You have three sections in the agenda. You're you tell us what is happening in each of them, what we are doing, what's working, and what's not working. Mhmm. That is usually a good framework. Right? Summary, what's working, what's not working. Summary, what's working, what's not working. And you support it with data. And then at the bottom, there is an area for action items that the team takes live, and so when we discuss something, we put the action item, the DRI, so who is in charge, and the deadline. And the deadline gets discussed, meaning that is how you enforce velocity. Right? In my mind, if people talk to me and they don't set a deadline, it's the same day. That is how my brain works. And sometimes with junior people, it happened like two Sundays ago. I asked for something because I had the meeting early on a Monday, and I asked the thing to the finance team. The person didn't say, oh, yeah. I'll get back to you. And then at 9PM, I didn't get the thing, and I say, where is the thing? I say, oh, I was thinking to send it tomorrow. And I could have done a better job there because I should have set the deadline, so I think it was my mistake. But usually on my mind, if I don't set the deadline, it's the same day. Is it wrong to ask someone to do that on a Sunday? It depends. Meaning, if it's just because, oh, it's just Matteo, yes. Why do I have to bother you on a Sunday? If I have a major massive meeting that could drive a multimillion dollar fundraise at 7AM on a Monday, I think it's not debatable. I'm doing the best for the organization and for the job of hundreds of people.

**Harry Stebbings** [58:42]:

So going back to the agendas, do you train people on how to write Yes. What does that look like? I come into Eight Sleep.

**Matteo Franceschetti** [58:48]:

One more thing, and and then I answer. The other thing we do in the meetings, we don't go through the agenda. We just go through the comments. So everyone had to read the agenda in advance. We do Google Docs. Everyone leaves comments, and you just go through comments. The rest we assume that you have read it, you're fine, and there is nothing to be debated. And so sometimes our meetings can be very short. Even if the agenda is very meaty, three pages, four pages of an agenda, maybe there are three things to discuss. We discuss those twelve minutes and then we are all free. The way you do it is by giving comments. Oh, this is not clear. What is the data supporting the thing? What's happening here? What is the second order effect? Why is there only one option? What are the other option that you consider, what is the effort and impact of these, how did you pick it. Right? Smart people, at a certain point they will start understanding not the question that will come. And then usually executives, particularly in the early days, try they to prepare and work on the agenda before the agenda gets shared with me or the rest of the executive team. Because usually the first mistake at the beginning is people are very long. They're a bit confusing. They don't use data enough. These are the typical mistakes. And so even there, start having a pattern. Right? The speed at which I can read an agenda is indicative of how good is the agenda because I can go through it really quickly.

**Harry Stebbings** [60:00]:

I'm really sorry. I've got twins. It's been a fucking manic weekend. I have my own marketing campaign to do. Didn't get to the agenda, Matteo. I'm really sorry. Should I come to the meeting? Should I not come to the meeting?

**Matteo Franceschetti** [60:12]:

No. We canceled the meeting, but you know I'm not gonna be happy. It didn't happen because you didn't plan accordingly, and so then I'm not happy. If you were shipping the new redesign of the app and you were monitoring all these metrics and then there was an unexpected bug, right, all these things that you couldn't expect but those were a p zero? Of course. At that point, do we need the meeting or you need to stay focused on that stuff because it's a P0, right? We call them P0, P1 and P2. So if there are P0s, we cancel the meeting and maybe we go async or maybe you don't have the agenda. But if it was because of lack of thoughtfulness in how you plan your schedule, that doesn't work. Does that happen often? No, I would say. But even there, because I think sometimes what I try to coach is just be smart. If you are really busy, just send a very brief agenda, well, literally three bullet points. The point of the agenda is not about being long. No one wants to read long documents. You can give me time back. Right? I save usually an hour every day before I start working just to review all the agendas of the day. Write some bullet points. If you were busy doing a p zero, I'm sure there is a lot of value in that p zero. Just write a bullet about what happened. Right? We shipped the app to 95% of the customer yesterday. Found this bag. We sold it within three hours, thanks to engineer x. I'm very happy.

**Harry Stebbings** [61:27]:

So we never not read it. Going back to the training, what does that look like? So I join Eight Sleep. Thank you for hiring me. How do you train me to write agendas and memos? The only thing is writing a lot of agendas. You

**Matteo Franceschetti** [61:38]:

start And you give me case studies. Here's 10 Oh, every let's say there is a weekly meeting for growth. There is a weekly meeting for others. There is a weekly meeting for product. Right? So there are these recurring meetings. Again, you go back to the executive summary and then the OKRs, and you might write your KR, or if you are the lead of the squad, you write everything. And at the beginning, you will write something that is long, that is not clear, is not data driven, and the executive will help you.

**Harry Stebbings** [62:05]:

But it's trial and error. And so we have trial and error there. On the writing itself, do you worry about it impacting velocity? Like, yeah. Yeah. I get it. You want an agenda, Matteo, but just get on the call with me and talk because we need to talk about this CAC. It's not acceptable. Acceptable. That is the typical answer

**Matteo Franceschetti** [62:19]:

of someone who didn't write agendas. It's something like the, think of the board deck. The biggest value of doing a really good board deck is not for my board, it's for me. It pushes me to think about creating a story of why this quarter was so good. What were the reasons? What really happened? Right? Preparing for questions. 90% of the value of the board meeting is in creating the board deck, not the board meeting. It's the same for the agenda. I don't want to come in a meeting where I don't have the information about that CAC. Right? If we need to discuss that CAC as you're saying, I want to read your thought, I want to read the data, I want to sleep on it. Obviously, I don't sleep on it because it's the same day. Right? But I want to rest a little bit thinking about that topic. You can't expect me to come into a meeting. I'm not a genius who just shows up and have a magic answer. I need to digest it. I need to read out the data. Maybe I want more data, and I leave you the comment before the meeting so you add the data. And so then we can run a meeting in twelve minutes instead of three hours and get to a better conclusion.

**Harry Stebbings** [63:20]:

Given the amount of sleep you get, you could sleep on quite a lot, Matteo. But can I ask you, do you use them historically? Oh, we did this last week. We did this

**Matteo Franceschetti** [63:29]:

100%. So we have an executive meeting every Monday. There is a section in my agenda called lessons, and I talk to all the executives about lessons that I learned with other executives. This has happened with this candidate. This candidate didn't work because of a and b. Here happened that we didn't achieve what we had achieved because we did this mistake. I create a cross pollination in those moments. And so there is the executive that experienced the thing with me. And then there are all the other executives so they can make questions. And that is how you really create the culture because they see, first, they accept mistakes. Something that is really accepted in our executive meeting, we have no problems with mistakes. I screw up multiple times and I say, guys, I apologize. These are the mistakes I did this week or this month or this quarter. And we do also postmortem and a pre parade every quarter. I don't know if you know this thing. No. Yeah. I It comes from Sequoia, the pre parade. So substantially you celebrate the quarter. This quarter will be successful, this next quarter will be successful if, and you write it down. And then when the quarter ends, you see the preparade and you do the postmortem. And you do it one

**Harry Stebbings** [64:30]:

on one or you do it as a team? Everything is shared. I don't care about anything. And then you discuss it with them. Because I think one thing that people will always do is they'll try and make it, this will be successful if we increase 25%. No. We should increase by 75%. People will set the goal lower because they want it to be a success. Yeah. And,

**Matteo Franceschetti** [64:47]:

no, this is another rule from Keith, I I think, from the his time at Square where substantially everything is public in our company except for comp. Usually comp, you don't want to share it. Yeah. But everything else is shared. I'll leave you the comments there if I disagree. Even because I want to incentivize the fact that we can disagree, this is something that is really strong at Founders Fund. Right? It's good to disagree. Then I think the DRI still needs to take the decision that they make. So the DRI? The direct responsible individual, so the one who is the owner of the project or the topic, is still their call. We use the thing that comes from Amazon that is disagree and commit. And I do sometimes in products. Right? Not always. But sometimes I decide to disagree, but I raise my hand and I say, I disagree and commit.

**Harry Stebbings** [65:32]:

But I'm disagreeing. Do you agree that I don't like disagreeing commit? It's like, I'll marry you, but not I end to you. Yeah. But sometimes it

**Matteo Franceschetti** [65:39]:

could be, I don't know, usually I use quadrants. Right? And so there is what is Good fight then.

**Harry Stebbings** [65:44]:

And

**Matteo Franceschetti** [65:44]:

knowledge. And so if the impact is really high, something that can kill the company, this is another rule where you understand when to delegate and not to delegate. And so you have impact and you have knowledge. If this is a thing that can kill the company and has, I don't know, a legal background, I used to be a lawyer, I'm not going to delegate the thing. And probably if it can kill the company, I'm not going to delegate the thing. Right? I want to be very, very involved. But if this is a thing that has very minor impact and I don't even know it well, that is not a good use of my time, and so it falls in the bottom left quadrant, and so I delegate. And so here is how I decide all the times if I want to take the final decision, no, we are not going to do that, even if everyone else disagrees with me, versus something that I think, look, this is minor. They might be right. They might be wrong. I don't have way more experience than them. Sometimes you also want the team to feel empowered. Right? So there is the tricky line as a CEO. Because if you always take the final decision, then people say, okay, if I have to come here and just do what you say, find someone else. The best minds, they wanted to feel empowered. But they also sometimes want to feel the pressure to say, I'm fine. I'll follow you. But this is your call. Have you always

**Harry Stebbings** [66:53]:

had a good culture? When was there a time when the culture was broken and you were like, we need to be a lot more deliberate?

**Matteo Franceschetti** [66:59]:

Yeah. I think when we hired a lot really fast, the culture broke a little bit, and it was because of the quality of the people. How did it break? Like, how does that show up in an organization? Speed and quality, which goes to operational excellence. What we realized is we were becoming slower as we were adding people and the quality was going down, which is really the worst. What happened is there was COVID coming and so that required multiple changes. And I think those changes push us to readjust things for the good. But if you ask me as a CEO, yeah, that was one of the times where if I look back, I think I should have done a much better job.

**Harry Stebbings** [67:34]:

Before we move on to sleep itself and fitness and health, is there anything that you haven't discussed today that you think is core to driving Eight Sleep's success?

**Matteo Franceschetti** [67:43]:

I think the other thing which we experienced at two is not politics, no ego. I think from my side, this approach where, again, I can talk about anything about even if I disagree with you with respect, but as a group, as an executive team. And our executive team, there is the executive, but now we have a bunch of second lines that I start bringing in so they learn by osmosis, our culture. Right? And so our executive meeting on Monday, expanded it. Now we have a lot of second lines. And we have this culture where I call it demanding and we are demanding and supportive. That is my style and it's something I learned from Sequoia. Sequoia is not one of our investors, but I still respect them a lot. Demanding means I'm extremely demanding, as you probably have seen in it. But I'm very supportive. I really care about my people. I'm the type of guy who's going to do anything for you. And supportive outside personal reasons, right? In business, or in this case means, as long as you were thoughtful, as long as you know we're operating with excellence, and you care, it doesn't matter if the result doesn't come. I will support you. Move fast, try that thing. If it fails, I'm there with you. It's something I was discussing actually yesterday with one of our executives about velocity because he said, look, I'll try to go for velocity. I believe this is the right thing to do. We risk to compromise quality here and there. What happens if something goes wrong? And I say, be bold. I'll be next to you. We are into this together. And so that is something that I think is really important. The other thing is this. I always tell my executive. Your job as an executive is not to be loved. Your job is to help your people achieve more than what they believed it was possible. That is what will make them great. That is what will help them achieve more. If you look back when you go to school, most of the times the teachers you remember were the tough teachers that you push you outside your comfort zone. That is a great leader to me. But as a leader, the way I think is if I believe you have a certain potential, my job is to help you fulfill your full potential, not to keep you at 70% pace in a comfort zone. I'm hurting your career. And this is a mistake a lot of executives do because they want to be loved, they want to be sometimes soft or too nice, know. They don't want to stretch you. The best players, the a players, think of Djokovic, the tennis player. Right? What he wants from his coach is to get the most out of him, to improve every single detail.

**Harry Stebbings** [70:10]:

But it assumes that everyone is world class talent. That's my only problem. The world class talent always wants to be stretched. Yeah. Okay? The truth is, how many people are in eight seat now? It depends who

**Matteo Franceschetti** [70:19]:

include up to show a 100.

**Harry Stebbings** [70:21]:

But, like, when you reach a hundred, two hundred, 300, it's not possible to only have a players by definition. Sorry, everyone has b players. And b players don't necessarily want to be pushed that much. I might agree that not

**Matteo Franceschetti** [70:32]:

everyone can be an a player, but I think every person deserve to fulfill their full potential. And if they don't want to get there, then we're not the right fit for them. I think everyone at Eight Sleep right now, largest largest majority are A players, then A players can, can be shaped in different ways. There are some that they push really, really hard, they go above and beyond, and there are some others that just master what they do and they want to stay within those boundaries. But everyone has a partner, everyone has a family, they go home and they want to be proud of what they do. They don't want to just do some basic things for the sake of doing it. There is where you need to help them raise themselves so they are proud and excited about what they do. If you just let them be and just do a repetitive job, these people will leave.

**Harry Stebbings** [71:15]:

I just think it's very easy to let people to be honest with you, some people don't care about being proud about their job. They just wanna tick the box. Yeah. But at that point, they can't be asleep. Exactly. That's the point. And then when you get them in, you need to get them out fast. Yeah. Exactly. Have you learned anything about firing?

**Matteo Franceschetti** [71:30]:

Yeah. Quite a bit. As you can imagine, I I did everything good about an agenda. But, you know, I I think for you and I, or at least for me, I come from a culture I'm Italian. Right? I come from a culture where in Italy is almost you don't fire. When I moved to The US it was really shocking to me to think that you can't let people go. Then the way you do it, need to be, first I believe in radical candor. One thing I always challenge the executive is, if I call person x that reports to you, do they know if you rate them incredibly good, good or meh? Yes or no? And if the answer is I don't know, then you're doing a poor job as an executive. The most important thing is people should always know what you think of their performance. Because this how you avoid problems in the future. And second, this is how you give them the opportunity to course correct. You can put them in a PEEP which is not substantially when you tell them that they need to improve their performance. But when you are there, the relationship, it kind of broken. Right? Because I'm telling you that you have a month or two to fix things. It's very brutal. The bad thing is this concept of course correction. Some people that report directly to me like chief of staff and so on, I give them feedback like real time the same day. And they know when I'm unhappy in a week or if I'm very happy another week. Forgetting the weekly thing, at least on a monthly basis, do people know how happy you are and what do you think of their performance? Whether they're strong or not? If you do that, the best, they will keep growing. If you shut up and you expect to wait twelve months to then share your opinion, and at that point you're even kind of soft, because if you don't share your feedback constantly, it becomes way harder to share a harsh feedback in twelve months, because you even didn't develop a relationship of feedback. But do you lose your shit and do you feel guilty about it? Yes. I do. Which goes back to my radical candor. If I have a problem, I tell you

**Harry Stebbings** [73:14]:

immediately. Do you warn people about that? Do you say, listen, Matteo, when you work with me, I will be very direct with you. Don't be too alarmed, but I will let you know how I feel in real time. Yes. I

**Matteo Franceschetti** [73:25]:

just say I will be very direct. I'll share what is on my mind. I don't pretend to be always right, but this is what is going on. And if you have to push back because you have a case, build your case. But I'm real time feedback guy, real time. If there is a presentation, I don't know, in the Alliance and one of our people is running the Alliance and I see something I don't like in the Alliance, I might Slack them in one minute after the lens with feedback about how to improve the lens for the following week. Do

**Harry Stebbings** [73:52]:

you ever get told you're too much? I get told I'm too much sometimes. It's like just 100%. Someone I read I run a lot, and David Goggins says the difference in passion, obsession is passion is when everyone's like, yeah. You're passionate about it. Well done, Matteo. And obsession, people are like, oh, you need to, like, stop that. And it's this interesting difference, and obsession is actually where you wanna be.

**Matteo Franceschetti** [74:11]:

Yeah. You need to start controlling yourself. But I think if people understand first that you have always the best intention, if they see the point, it's way easier for them to understand it. Then sometimes they might not. But I think it's an area where I improved, but you don't want to compromise velocity and feedback. I think the feedback is still in the best interest of everyone.

**Harry Stebbings** [74:30]:

Dude, I'm enjoying this so much. I do have to touch on just, like, fitness and health. In terms of sleep, let's start there. Why not? What are one to two things that you think are non obvious that is really important for people to know?

**Matteo Franceschetti** [74:43]:

The two basic things are really how much you sleep, which is pretty basic, and consistency. Because you really train your biological clock to fall asleep at the time and to wake up at that time. Your circadian cycle can substantially be trained. And so consistency and amount of hours you sleep.

**Harry Stebbings** [75:00]:

And amount of hours varies. We have twenty five year olds listening and we have 50 year olds listening. Do they need different amounts?

**Matteo Franceschetti** [75:05]:

It depends. So usually as you get older, they're just harder for you to sleep eight, nine hours. A rule of thumb is between seven and nine hours for everyone except very, very few people that have a genetic modification and can sleep only three, four hours. So what non obvious stuff should we know, should we do? One thing is usually playing outside of Eight Sleep, but playing with your own body temperature before bed is really impactful. So let's say you're in a hotel or you have a larger home and you can have a sound and an ice bath. If you do that before going to bed, it's gonna help you sleep better meaningfully. Right? It's one of the biggest thing even if you listen to Do you need the contrast sauna and ice bath or can you just do You can also do it only sauna. So that is why also people recommend just doing a hot bath or a hot shower. The way it creates is it starts warming up your body, then your body needs to dissipate the heat from the bathtub, and so the core body temperature goes down. So it's actually counterintuitive, and that is when your body prepares for sleep. Because the second you fall asleep, your body temperature drops, and so you want to try to create that system. We want have a cold room as well when

**Harry Stebbings** [76:15]:

we sleep in

**Matteo Franceschetti** [76:15]:

it? Yeah. You want be in a cold room. The thing there where which is a typical mistake is you hear a lot of people say, oh, you should sleep at 68 degrees. That is wrong. And the reason why it's wrong is 68 degrees might work, I don't know, in the first part of the night, but not in the second part of the night. Your body temperature changes during the night. That is why sometimes at 4AM, 5AM you start feeling a bit cold and now you bring back your blanket and you cover yourself, is because your body temperature is changing and your body is preparing to wake up. How much does it change throughout the night? Not significantly, but enough for you to really feel that. The temperature drops at the beginning of the night. It's like a u curve. It drops at the beginning of the night, so immediately as you fall asleep it goes down. And then two, three hours before you wake up, the body temperature rises, and so your body is preparing to wake up. Which if you think, if you go back to thousands of years ago, it just follows what happens in the night with the sun. Right? If you were sleeping in a cave. Right? The temperature drops because there is no sun and the night comes, and then a couple of hours before sunrise, the temperature starts rising again because the sun starts coming out.

**Harry Stebbings** [77:18]:

You said beforehand that you sleep nine hours a night, which is fantastic. There's many people who have three kids. That changes a lot. I don't have children, but I imagine that changes a lot. Yeah. Advice do you have for them? Like, it's just a physical impossibility to see that. Yeah.

**Matteo Franceschetti** [77:33]:

So I don't have kids, so I don't know. And they might disagree and they will likely disagree. And so we have executives which have kids. And there is one who just had a kid, I think, in March. And we have an internal competition with sleep data inside the company. So there is a sleep fitness work up that is just inside the company, and so we compete with the sleep score every day. And this guy is always in the top three, four, five, and he was able to, I mean, organize his schedule with the kid to sleep enough. Then obviously, depends particularly when the kids are, based on what I know, when they're not small. Right? They wake up in the middle of the night and so there are a bunch of interruptions. But I think once they cross probably that threshold, I guess the kid is going to sleep eight hours, I don't know. How does food impact sleep? In a lot of ways. The most impactful thing of everything is alcohol. Alcohol is massively is going to disrupt your sleep massively. You feel that you are probably more relaxed mentally, you think, oh, I will have a great night of sleep, but in reality all your biometrics, heart rate will accelerate, HRV will drop, and in general your sleep architecture, so the sleep phases will change. Usually you lose probably somewhere around 20% sleep quality with alcohol. Then carbs, they help you fall asleep based on a bunch of studies. So you you tend to feel more sleepy if you had carbs. But then the quality of sleep, in particular if you had quite a bit of carbs, is fairly impactful. Quite a bit of carbs, just

**Harry Stebbings** [79:00]:

for people listening. Is that a bowl of pasta?

**Matteo Franceschetti** [79:02]:

Yeah. It's probably around a bowl of pasta. Then sleep is very subjective. Right? So there are all these rule of thumbs, but the point is there is very little knowledge knowledge about sleep at scale. And that is where I think a company like us will make a massive difference, right? Because today if you really want to know about your sleep stages and everything you need to go to a sleep clinic. Well they cover you with sensors and you are in this clinic which is a foreign environment. Well, instead Eight Sleep, now we have hundreds and thousands of customers sleeping on these devices every single night in their home. We are discovering things literally no other professor or scientist can know just because of the scale. And so it's very subjective. Even the alcohols, there are certain people that react to alcohol in a certain way versus others.

**Harry Stebbings** [79:44]:

I said to a girlfriend about this interview and she said, I wanna know, ask Matteo, why can some people drink coffee before bed and sleep well? And I can't.

**Matteo Franceschetti** [79:54]:

Yeah. It's very subjective. In general, the rule of thumb is you shouldn't because it takes around eight hours for the coffee to really leave your body. I don't have a lot of coffee, but if you have coffee, you should stop drinking coffee at least eight hours before bed. How much does sex impact sleep? There is very little data on that. I think there is a lot of mental, probably, relief and and relaxation that helps you. I mean, there will be probably an hormonal impact across different dimensions, but the knowledge is very limited.

**Harry Stebbings** [80:24]:

Final one, I promise. Exercise, how does that I do a lot of running. I do thirty, forty, 50 k. Does that help me sleep better or not? My body's very tired. So first,

**Matteo Franceschetti** [80:34]:

depends when you exercise. I stop exercising. After 5PM, I will never exercise, but I exercise every morning. Why why So two things. First, you rise your heart rate. Right? So it depends on what time you go to bed. I go to bed fairly early, 09:30, ten. You don't want to do exercise or it's not recommended to do exercise in the second part of the day because you accelerate your heart rate. You accelerate your body temperature. You create a bunch of changes inside your body and then your body needs to go back to baseline and then needs to get into the phase of preparation of sleep. And so the best of the best is if you can train in the first part of the day so there is plenty of time for your body to go back to baseline and then go into sleep preparation. So if I play, I don't know, paddle or tennis, which are two sports that I like at seven PM, there is no way I fall asleep at ten. Everything in my body is still too active compared to usual. Do you ever have, like, a late

**Harry Stebbings** [81:27]:

one? Stay up till, like, one or 2AM?

**Matteo Franceschetti** [81:29]:

No. Unless it's for work, I almost never do it. Oh, there is a crisis at work.

**Harry Stebbings** [81:34]:

Exercise, sleep, food, which one do you slip up on most?

**Matteo Franceschetti** [81:39]:

I mean, sleep, I sleep nine hours, right, every single day. Training, I train substantially every day. When I'm in Miami where I'm based, do an hour and a half in the morning, tennis paddles, something like that.

**Harry Stebbings** [81:49]:

What does your training routine look like? Yeah.

**Matteo Franceschetti** [81:51]:

So it's usually 80% cardio, 20% strength. And cardio, I range between zone two and zone zone five. Do you have a monitor on? I I use this guy. I use Apple Watch, so I try to monitor that. Usually, you wanna be based on what Peter Attia says, he recommends 80% of the cardio in zone 220% in zone five, so you can really train your heart rate to spike and drop. There is a couple of metrics that few people know but they are very helpful that is heart rate recovery. But substantially you, you can use a, an app called Zones that gets the data from your Apple Watch. You want to see how much your heart rate drops after a spike if you rest. But let's say you spike your heart rate to 170, and then there is one minute and two minutes. How much does it drop? So from one seventy to one thirty, and then from one thirty to one ten. That speed is indicative of how good your heart rate is. Which one do you sleep up the most? Probably between the three nutrition, a little bit more. But even there, I'm on a keto diet. I usually eat once a day just for dinner. I cheat on Fridays. I have a pizza with my wife on Fridays, so the the Italian part of me comes out. So you just have dinner? And usually I have a dinner, or at least I do the what is called the sixteen eight fasting.

**Harry Stebbings** [83:04]:

What does the

**Matteo Franceschetti** [83:04]:

dinner look

**Harry Stebbings** [83:05]:

like normally?

**Matteo Franceschetti** [83:05]:

Yeah. It's usually some form of meat. I don't eat a lot of red meat, but just because of preference for other reason. Sometimes we have a soup with with veggies.

**Harry Stebbings** [83:14]:

You're a bit pissed off, Matteo. I mean, like, you you just fasted for twenty hours, and you get a soup with veggies.

**Matteo Franceschetti** [83:20]:

Yeah. So I tested a bunch of that thing until when I found something that I really like. So I don't know. I could pair it with guacamole, which I really, really love.

**Harry Stebbings** [83:29]:

Yeah. I play with that. Can I ask a bit of a weird one, and then we'll do a quick fire? I listened to you, and you just sound a bit perfect, if I'm honest. Yeah. Do you have anything that's just a bit weird and all? I think the challenge

**Matteo Franceschetti** [83:39]:

is I try to do all these things, and so it's You put this pressure on yourself. Yeah. Exactly. So that is probably the, you the the hard part of it, you know, pushing yourself to this limit. And so this sometimes impacts your mood. You ever just like, oh, fuck. I can't do this. Yeah. And at that point, you have, like, now the equivalent of the cheat day. Right? It's not that you you can always be like like this or that, but you shouldn't be perfect every day. This is something I learned from a video of Tom Brady, but what you want is the consistency. It's less about cheating one day or another day, but if you zoom out and you look at how you manage your things, are you consistently enough in all these different dimensions? And it's less about one day or two days. It's more really look at the ear, at the mouth, at the ears, and can you sustain that? That to me is more important than anything else. Even alcohol. Right? You and I, we had this, you know, this episode a few years ago, and since 2019 is when I stopped drinking. Can you drink from time to time? Yeah. You can. But are you consistently, in my case, avoiding alcohol? Yes. And and the reason why I do it is just because I feel bad.

**Harry Stebbings** [84:43]:

I totally get you and agree. You said about sustaining over years. Final, final one, promise. Your cofounder is is also your partner. What's the secret to a successful marriage?

**Matteo Franceschetti** [84:52]:

I tell you a story first that you like. So probably as you feel like you have understood this, I'm always on, unless when I'm sleeping, about the business. But my wife, sometimes she wants her time where I don't bother her about the business. Right? She wants to be in her own world. That is how she, you know, digests things and develop ideas. And so sometimes, you know, it's, I don't know, 9PM, and and I I wanna talk about some stuff for her sleep. And she said, look. After this time, you need to treat me like any other executive and colleague, so you can't bother me all the time. And so you can't talk about work after 9PM, whatever. You're like, right. Sleep time. You can't. Don't wait. But so I say, okay. Fine. I need to treat you like any other executive, and I can't talk to them because I wouldn't call them at 10PM, but I would slack them. And so sometimes I just Slack her and we are both on the couch and like 9PM and there is something on my mind about growth. She leads growth and marketing and I start Slacking her as it is the phone that vibrates there next to me, but I cannot talk about the topic.

**Harry Stebbings** [85:53]:

Does she answer in real time? Or does she wait until

**Matteo Franceschetti** [85:55]:

tomorrow? Depends. If it's urgent, whenever she looks at that, then she will answer. But that is funny because sometimes also we are excited, oh, can you ask this thing to we we call her AZ because it's Alexandra Zatarain. Right? And we call her Azi. And, okay, you ask her this too Azi, and I say, no. You ask her because I treat her like literally any other executive. Even if we are in the same house and she's in her office and I'm in

**Harry Stebbings** [86:20]:

Is it difficult to retain the romance?

**Matteo Franceschetti** [86:22]:

I would say for 90% of couples probably. In our case, I don't know, we clicked, and so that works really well. And she's really good at setting boundaries. Even on a Saturday and Sunday, we talk about work quite a bit, but at a certain point, she said, enough. At that point, I just need to live in my world, and I can't talk about that. Was there ever

**Harry Stebbings** [86:42]:

a moment where it was challenging? And what did you learn from that moment?

**Matteo Franceschetti** [86:45]:

Yes. In the earlier days. Because, you know, Alex leads growth, which is something very measurable. Revenue, CAC, there is no debate. And in a company growth is not that it's always going to go great. My job as a CEO is to push, particularly when things are not going great. And so for her or not, then you need to pay attention to not create some resentment and you need to understand when they are going through a lot of pressure. Because growth has this problem that first is daily. Every day the first thing I look at, right or wrong, probably wrong, but it's revenue of the previous day. I receive a Looker dashboard. Right? That's the first thing I look at. And so that immediately sets your mood. And the other brutal thing is you do a great year and then January 1 comes and is you need another great year and everything starts from zero. It's really hard for growth people and there are a lot of pressure and then that comes immediately after Black Friday for us, which is another big moment. And so at the beginning I think we had to fine tune that part of the relationship because, yeah, sometimes I was too much. But I think that is where she's been great. Did she say that? Yes. The other funny thing is we use Slack at work and then we use WhatsApp for personal stuff. And so sometimes I might be writing about growth and we need to accelerate the thing, we need to do this, this, this, and that, and then on WhatsApp and saying, oh, it's Friday night. I can't wait for our cheat day of pizza. Right? And and so we have two channels for communication.

**Harry Stebbings** [88:04]:

Listen, Listen, I I wanna move into a quick fire round. So I say a short statement. You give me your immediate thoughts. Does sound okay? Let's start with this one. What do others not know that you know to be true?

**Matteo Franceschetti** [88:13]:

Your bed will become the most powerful preventative health platform in the future and will save your life.

**Harry Stebbings** [88:19]:

In what

**Matteo Franceschetti** [88:19]:

timeline? We already saved a life, multiple life, because some people saw that their biometrics were upside down.

**Harry Stebbings** [88:26]:

Can you tell me actually, one of your investors told me, ask about how eight has saved a life. Is there one that sticks to mind?

**Matteo Franceschetti** [88:32]:

Yeah. Multiple stories, but there is this one. It was the first one we got. So a customer writes me, and he say, I just wanted to say thank you. You guys saved my life. He or she didn't get into the specifics, but the biometrics were off compared to the usual baseline. This person went straight to ER, they found there was a major health issue, he had an immediate surgery, and that saved his life. It was a big deal. And that is when now you really realize that you're proud of what you're doing. You understand why we're working so hard and now putting so much effort in what we do. One of our goals is we wanna track how many lives we save.

**Harry Stebbings** [89:05]:

But, like, how long do you think it is before you are having preventative body scans in your sleep?

**Matteo Franceschetti** [89:10]:

Three

**Harry Stebbings** [89:10]:

years, five years, ten years?

**Matteo Franceschetti** [89:12]:

None or less. And then who owns that data? Consumers? Yeah. I mean, what is the standard market practice of, like, an Apple Watch or like a Well,

**Harry Stebbings** [89:21]:

no. I'm just thinking, like, if you have an Eight Sleep that's preventative health and scans you every night, and you actually have, like, the anonymization of data that can correlate your body to my body or my mother's got multiple cirrhosis, they can tell that temperature correlates to relapses in multiple cirrhosis, and you could actually have this incredible global data set that learns from each other.

**Matteo Franceschetti** [89:39]:

Yep.

**Harry Stebbings** [89:40]:

That's really cool.

**Matteo Franceschetti** [89:41]:

The power of discovery, honestly, is insane. Because the advantage we have at Eight Sleep are three. One, we have a lot of space. Right? So we can literally add any sensor you can think of. Wearables can't. Second, we have you for eight hour ish every day. It's a lot of time, and you're standing still. And third, once you install our product, you don't remove it. And so we have very longitudinal data, which is one of the biggest issues. Right? A lot of wearables people stop using them within three to six months. In our case, they keep the product there, not because we are geniuses, but because it's the type of form factor. And so if you fast forward, even just now, for us understanding what happens across a million nights, it happens in less than a week. CEO of any

**Harry Stebbings** [90:22]:

other company for a day, which would it be? Tesla.

**Matteo Franceschetti** [90:25]:

No. Actually, you know what? I was thinking of this. It would be the CEO of Mercedes f one or Ferrari f one.

**Harry Stebbings** [90:32]:

Why?

**Matteo Franceschetti** [90:32]:

I'm really into f one. If if you ask me if I was not an entrepreneur, what else would I like to be is to be an f one driver. I raced with go karts when I was kid and and all that. And so I think there's a reason the man and the machine, high performance, high engineering, a lot of technology, but applied to sport. And I used to be an athlete. And so that kind of competition and challenge would excite me so much. What's your favorite consumer brand? Two that I respect a lot, one is Tesla, and the reason why is because of how obsessed they are with the customer experience. Right? They are minimal. They are simple. The product evolves with software. And so we use Tesla a lot as an example at Eight Sleep. And the other one I really like is Nike because they honor great athletes. And so there is this respect for the customer in the way they honor it. It's really the word honoring your customers that I really love. It's not customer obsession. Not Jeff Bezos mentioned. I calls it customer obsession to me.

**Harry Stebbings** [91:32]:

It's honor your customer. Tell me. You can have dinner with anyone, dead or alive. Who do you choose to have dinner with, and why them? Three people. Really pushing the blade

**Matteo Franceschetti** [91:40]:

out here. Yeah. Ayrton Senna, a famous Formula one driver who died in 1994, but one of the greatest. Winston Churchill, because I love history. And when I read about Winston Churchill and how he handled a a lot of different things in the Second World War or that, I I find it fascinating. And then Barack Obama just because he was one of the youngest US presidents. And not because I'm with this political side or the other one, I'm pretty agnostic. It's just people I would like, you know, to have a dinner and make you a bunch of questions. Mhmm. How did you handle that? How how what happened here? How did you and your wife handle well, you asked me, but to these guys. Have you met Peter Thiel? I

**Harry Stebbings** [92:17]:

met him very briefly. Tell me, what single piece of advice have you been given that most stuck with you?

**Matteo Franceschetti** [92:23]:

I think that you never have a second chance to make a first impression. And so always try to be, you know, very thoughtful when, you know, you meet the person, particularly if it's a person on your your respect, to prepare it and to be knowledgeable and to go into the meeting very well prepared. What is the strongest belief which you had that turned out to be wrong? I have this contrarian approach to rest that I call it active recovery. It's it's pretty weird, but if I go on a vacation or if I take any time off, everything is designed around me recovering as fast as possible. I almost think of that still as a part of my daily performance. Right? I think of myself like an athlete, even if I'm the CEO of a company. And everything I do, I try to do it to increase my performance as an athlete, my professional performance. And so my wife and I, we AB vacations, where we AB test different things and see what help us recover the most, particularly mentally, and what are the things that help us. What is he tested? From the lengths of the vacation to what we do in a vacation. Right? If if you wanna go on a vacation in a resort and stay at the pool and read, or you wanna do nature and just walk.

**Harry Stebbings** [93:33]:

What what have been lessons on length and then type for you?

**Matteo Franceschetti** [93:36]:

Yeah. So usually four days is more than enough. We almost see no incremental value after that. The key thing is to disconnect from socials. Sometimes if it's for a few days, I even don't learn or listen to podcasts, I really try to recover and I just do what I call stillness. I try to spend as much time as possible doing literally nothing and letting my brain go and just think about everything. I need to train, so if I just stop training and I just eat a lot, then I just feel guilty with myself. The other thing for me is I don't disconnect completely because what I realize is good or bad sometimes, I like to know what is happening and if there is any urgency. And so if I just try to put my phone away, it just gives me more anxiety. And so I'm always on. I'm always on vacation. You will never find me off. And people say, oh, why you do that? And to me, it's actually the thing

**Harry Stebbings** [94:26]:

that helps me the most. Final one. We have a show in 2033. You further increased your productivity to all new heights. Where's Eight Sleep in ten years?

**Matteo Franceschetti** [94:37]:

We have saved a million lives. We have and improved millions of lives, right, between sleep and preventative health. We're a public company, hopefully by then. And the reason is why I think that we'll set the right structure to build a long term business. And a word I use a lot is building an iconic global company, meaning if I think of legacy and leaving a mark in the world, to me it's not about the money. It's really helping these millions of lives and doing it with a brand that is iconic and globally recognized. If you ask me if you had a magic stick, what you want your life to be spent on, that's it. Helping millions of lives with a brand that is iconic and well recognized globally. You really stand with that brand. You care about those guys, and you know that that brand cares about you, and that brand is doing something well for the world.

**Harry Stebbings** [95:27]:

It's very rare where I actually do a show, and I'm like, oh, shit. I need to change a lot of how I manage teams. This was, like, absolutely that. Thank you for doing this. This has been amazing, and you are a star. Well, thank you so much for having me. As I said at the beginning, I think that is one of the most granular and action packed and an advice filled episodes that you will ever hear as an early stage founder hiring and retaining teams. If you wanna see more from us, of course, you can on YouTube by searching for two zero VC. But before we leave you today,

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