Fundraising Wisdom that is Total BS; Dilution, Meeting Associates, Taking the Highest…

Thank you. Feeling is mutual. Been a bit of big admirer of the show and glad to be on it.

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would have been very astute to notice that I was very into computers. So from a very early age, we always had a computer around, and I owe my mom’s boss. She was working as a secretary at Stanford, and her boss was professor Hector Garcia Molina. And he had this amazing generosity where every time he would buy himself a new computer for home, he’d always have my mom buy the same one for herself, and then me me and my twin brother actually got to play with it a lot.

So, we’d always have the latest and greatest thing at home because of his generosity, and that I think propelled me to what I’m doing today because I’m into computers, which is something I’ve been doing ever since I was 10 and even maybe younger.

The first yes was about eight years ago when my now wife said yes to getting married. Any other yes I’ve gotten from venture capitalists or employees or kind of pales in comparison to that big yes. And then noes, there’s one there’s one pattern of noes I’ve gotten that now my team knows is the the most motivating no I get, which is the version of a no that starts with no, that’s not possible. And I am a big believer in technology’s ability to do things that were thought of as impossible before.

I’m very motivated when somebody has a cynical or pessimistic view on what technology can do, and there’s nothing more motivating to me than hearing that and then trying to prove them wrong by showing them, by building the demo, by building the product, by building the feature to prove that that is something that tech can do. And in some ways, every version of every startup I’ve ever done, there’s some seed of that idea that’s that no. That that’s not possible that motivated me to persevere.

I think that’s largely true, and I find when I heard that, I think what I think about is, you know, I’ve had lots of pivots in my startups. Everything I pivoted away from almost always could have worked. You know, it’s not so much that it’s the unequivocal, at least in my mind, maybe this is my delusional optimistic founder mind. I never thought to myself, oh my gosh, this would never work. It was always a version of, if you draw the analogy, like climbing a mountain.

If you’re starting a startup at the base of the mountain and as you climb the mountain, you see other paths to the top that seem a little bit easier and a little bit better, and you’ve learned a lot along the trip. You’re like, oh, I’ll just I’ll go down a little bit to go back up that path. It’s not to say your current path, you couldn’t get to the top of the mountain. You know? Eventually, you’ll get there. It’s just gonna be much harder. So in that sense, I think it also goes to this idea that, you know, ideas are cheap.

It’s all about execution. So I I do think almost any idea can work with enough perseverance. Rarely, very rarely, is it just fundamentally broken as an idea.

The best advice I give is advice I’ve gotten. So there’s two two things I’ve heard on this topic. One was an early investor in Optimizely, and actually a coworker of mine back at Google, Elad Gil, who’s now a very successful investor of himself. I I once sought his advice on this exact question. He told me pretty bluntly. He said, things that work tend to work really fast. You know, it was kind of this anti pattern. Most people would say, well, you gotta stick it out and be perseverant and, you know, keep, you know, banging your head against an idea and if you keep executing it.

But if you don’t even see glimmers of hope, it doesn’t have to completely be working. You know, you you have to see some version of a glimmer of hope in the thing that you’re doing. Even some of the stories like Airbnb that people just thought of as this like, it took for years and years in perseverance. There were glimmers of hope very, very early on that the idea was really powerful. That was very eye opening to me, and you you kinda say, okay. Yeah. If we’ve been at it for, you know, six months and you don’t see a lot of the glimmers of hope, then maybe it’s time to pivot.

The other one was recently I saw Dalton Caldwell was asked this question, the YC Group partner, and he said a good pivot feels like coming home. And that is something I’ve definitely resonated with. Every time I’ve, you know, pivoted or changed idea or adjusted kind of what our focus is, in many ways, similar to my mountain climbing analogy, it it feels like you’re on a better path. It feels like you’re closer to your core, closer to the problem, you know, closer to being able to, you know, solve it, and you were kinda on the periphery, and now you’re in the core.

So that would be my two thoughts of advice. You know, things that work tend to work really fast, and if you’re gonna pivot, should feel like you’re coming home.

Yeah. I think that’s totally true. I and I I see experiments as kind of Pareto optimal or eighty twenty, like, you’ve got all your most juicy exciting hypotheses. And, you know, if those aren’t working, you can always come up with new things to try, but it’s almost always gonna be like, the if the last five things haven’t worked, like, is that new six thing gonna be the the key to success? Sometimes, but almost always, if you’re naturally gonna try the things you’re most optimistic and bullish about.

But at some point, it’s not so much that you don’t have the experiments. It’s like you’re starting to ask yourself, is this even worth trying? Is there any remote chance that what I’m gonna try next is even gonna make a difference?

Well, I I, you I I have these tweets that have gone viral where I I compare. I say, first time founder x, you know, second time founder y. And it’s usually some painfully true thing that I did when I was a first time founder x and something that’s sort of insightful, something that I’ve learned, that’s why. A good example of one of them was, you know, first time founders brag about how many employees they have. Second time founders brag about how few employees they have. You know, it’s sort of like this deep insight into, like, how to build a company.

And I definitely think there’s some truth to that. It’s surprising to me how many despite all of this great content out there and Y Combinator and all this trying to help first time founders, they all kinda make the same class of mistakes over and over again without really, you know, internalizing the the the learned wisdoms. Another way to put it like, if I make myself

I think the core of it is the kind of person that makes a successful founder is usually pretty nonconformist. It’s very hard. And either because the market has pushed them out from traditional jobs and they just can’t succeed in traditional jobs, so they start a company, or the entrepreneurship has pulled them in to want to be deeply autonomous and have control over their own destiny. So it’s just very hard. I’ve actually really struggled with this. I was just talking to my old cofounder from Optimizely, getting his advice because he’s he’s a YC group partner now, Pete Koomen.

I don’t really know how to give advice to other founders and have it stick. You know, some of my best investors have Jedi mind tricked me be because they’ve sort of never directly said what they thought. They’ve sort of influenced me through, you know, persuasion. I think this is why a lot of first time founders make mistakes. They don’t listen to common wisdom. They’re just deeply wired to be nonconformist. And the idea of doing something the old traditional boring way is kind of maybe unexciting. So and that and there’s naivete.

So it’s a combination of ego, arrogance, nonconformity, and probably naivete. All combined, you end up with a lot of founders who they’re not they’re not they’re not gonna kill the company usually, but they they waste a lot of time and energy on things that ultimately don’t matter.

Focus. That’s

huge one. I made up for lack of focus when I was a first time founder by just sheer hours. You know, I just worked every waking hour. But now with the beautiful things, I have the benefit of hindsight. I have ten years I put into my last company, and I can recognize that really only three or four things that we did made the difference in the success or failure of the company. At At the time, I was doing thousands of things, and I thought all of them were important.

But in the moment, you can’t tell. You don’t know what is the key things that help and are gonna meaningfully change the outcome versus the things that are just, you know, work that feels like it’s important. And that that ability to focus, that ability to remember that the main thing is the main thing should say the main thing, that’s the thing I think a lot of first time founders fail. For me, I also had the constraint of having kids, which also forced me that the second time as a founder to really focus on the things that matter because I don’t have nearly as much time as I once did as a first time founder.

So that’s a skill I think a lot of first time founders can really improve.

I’ve really made a lot of mistakes in my past around hiring and abdicating responsibility to them, and I think it was the ramp founder recently on the show of yours who talked about this. So you can’t abdicate your responsibility to the people you hire. You have to be involved enough to really hold them accountable, to understand the details, to probe, to push. And that’s something I certainly bailed at in many cases my first time around where I hired people who are really great. I mean, that’s partly why I hired them.

They did fifteen years of the job that I’d hired them to do. And so how could I, this, like, 20 founder who’s never been the head of go to market, at a huge multibillion dollar public company, give them advice or hold them accountable? And so that’s something I really struggled with the first time. I just didn’t even know that was my job. You know? I just sort of thought, get out of the way. Be, you know, be the kind of founder that, you know, gives them ownership, autonomy.

And what I really learned is that at the end of the day, you as the founder and CEO of the company, you hold it back. Like, they’re gonna be there. There many of the people, who join your company, even if they’re great executives, they’re just on for a little bit of the ride. You know? I’ve had several times at Optimizely where they’ll join, they have their they make their decisions, and then they end up leaving. We either part ways amicably or not, and I’m held left holding the bag.

I’m like, boy, if I’m gonna be left holding the bag at the end of this, I better be bought in on the things we do. And some of the biggest mistakes we made are when I sort of abdicated my responsibility there. So, you know, today, I try to really be involved where I feel like it has the biggest impact. I’m not all up in everyone’s business. I’m up in the business that I think is the highest impact to the company, and that amount of accountability and focus, I think, helps set example for everyone else, the other managers of the company, knowing that it’s their job to to be enough in the details that they can hold people accountable.

It’s a balance. You you you never know. And I try to pick the things I think are highest impact, but only with hindsight will you know for sure that those are the highest impact things.

Yeah. Oh, absolutely. Yeah. Yeah. Yeah. Because the other part about the nice thing about second time founders is by the time they decide to be a second time founder, like, you kind of already derisk one of the main things, which is perseverance. I would much rather rather, you know, invest in somebody who’s, like, a 100% gonna stick with it and try to make it work and maybe 80% is smart than the other way around. There’s a there’s a lot of, you know, people who are smart but end up giving up because it gets hard, and it always gets hard.

So when they’re secondhand found, they’re willing to sort of put themselves through that punishment again. That alone is kind of a strong signal to me, and you’ve learned a lot. You know, I personally, I’ve learned a lot. I’m much better because of the first company I had.

Absolutely. Yeah. The caliber of person that I can hire today is far far better than the person I could have hired, you know, when I started Optimizely. So I do think that’s a huge factor as well. You can hire much better. And certainly, if your first company did okay, did well, you sold it, that also I think helps a lot when, you know, employee thinks, should I join this person? Well, they had a good they had a know, they’ve done one good thing. Maybe they’ll do another.

I think when you’re in the moment and you are the founder and you are the CEO of the company, that should be your mind mindset. But, you know, you never know where the company goes. If the company doesn’t make it or doesn’t become the next you know, there’s, like, 10 companies that just you you described. There are gonna be huge multibillion dollar public companies the first time around. Bill Gates, Mark Zuckerberg. It’s lot more likely than not that the company that they’ve started will fail. And then the second most likely is it’s gonna have a medium to okay outcome.

And so that and then if they decide after that, do they wanna start a new company, that’s a huge pool of people who I think, you know, they shouldn’t be knocked on for whatever reason if their company failed. You know, if it failed because of fraud or whatever, then you shouldn’t invest in them. But more likely than not, it’s some timing to market issues. You know, there’s some factors that can explain the the failure. I wouldn’t, you know, not invest in them. There’s just only know?

Yeah. If you can invest in Mark Zuckerberg every time, you should do it. There’s just only so many of those out there, and and oftentimes, you might not even be able to get into that round. So

The the biggest pattern of failures fall into the camp of my gut says we should do a, somebody else thinks we should do b, we end up doing b and it turned out poorly. There’s plenty of times where I said we should do a, and it turned out poorly. That wasn’t anything I remember. The things that I really just stay up at night and then, you know, I’ve been I’m over it now, but you it takes a long time to get over your company are things where you’re in your in your bones, in your gut as a founder.

You you you don’t feel is the right move or the right focus or the right investment. But by smart people who you’ve hired, your board, you know, they’re it’s not because you’re being bamboozled. It’s people that you’ve decided that are gonna help influence the path. You go with their gut and or you go with their decision and it turns out poorly. Many, many examples of this, you know, from moving to the enterprise too quickly to sort of not recognizing the core of what we had to to sort of abandoning the core problem of solving churn.

Like, there’s all of these things that, like, I I time and time again felt in my bones we should do something, and I didn’t have even the words or even the arguments sort of and I I like to think I’m deeply analytical and data driven, but oftentimes, it’s just my intuition. And I because I couldn’t verbalize my intuition, I couldn’t even feel like I should defend the path we should be on. I didn’t do the job of the CEO to to be decisive, and and I think those are the biggest lessons I learned.

The biggest mistakes I made were not following my gut.

I think the most important thing is to understand what’s working about your business and what’s not. I think we had a core magical thing working at Optimizely from the almost beginning, which was this product led growth motion, which which, by the way, didn’t exist. That term was in many ways actually the person who coined that term used Optimizely as an example of of product led growth before the term existed. And, you know, a good example is, you know, we had on our website, when you go to optimizely.com back in 2013, you could put in the website the URL for any website.

You could put it into our our homepage. You don’t have to sign up, and you could instantly start making changes to the website and seeing what our visual editor looks like. That alone, that was such a magical part of our product that led to not just small businesses, but Starbucks. You know, starbucks.com, a guy there who’s in charge of optimization and conversion for starbucks.com, had that experience, and he sought forgiveness, not permission to put you know, he did to run our product for $79 a month.

He put our AB testing product on his homepage. And so Starbucks, that’s an enterprise company, but we missed you know, we had sort of this confusion around there’s SMBs, and the way you go at them is product led growth or, you know, the time is sort of self-service. And then there’s enterprise. The way you go at them is with human beings who, like, fly up to Seattle and meet with the, you know, headquarters. And we had this magical thing of getting large enterprises to adopt our product without a human being in the loop.

And I think we too quickly ran away from that. So so it’s recognizing that was a core thing working well. And then we looked at the numbers and said, oh, okay. Like, of all our businesses, the ones that are retained the best are enterprises. Let’s go after the enterprises. So let’s go hire a big enterprise sales team. Like, then that last leap was, like, too too naive. We should have thought more about what would be the best way to get the Fortune 100 companies using our product, and I think we could have done that by being true to our core and going after this much larger market.

I’d say when you feel market pull. When you feel the market like, I gave the example of Starbucks, you know, they’re going past all of the processes. They’re going past all like, they’re seeking forgiveness, not permission to use your product. You’re seeing signals that there’s more than just a logo. There’s a person at that company who feels the pain so viscerally that they’ve even heard about what your product does or they’ve tried it yours themselves. And now what a salesperson can do is augment and sort of maximize the potential of that relationship.

They’re not just, you know, cold calling into the Fortune one hundred trying to get somebody to pay attention to your rinky dinky startup that, you know, more likely not even if they got a meeting, they’re gonna dismiss because they have no intrinsic interest in what you do.

Yeah. I mean, I do think titles they’re a bit weird because they’re both kind of free to give in one sense that it doesn’t cost you more money, but they’re expensive in that it creates a sort of, like, mutually assured destruction. You know, as soon as you give out that first VP title, then everyone wants to be a VP. And that’s why I think companies actually go in these ways where at early stage, everyone’s ahead of. You know, you’re head of marketing, of engineering. You don’t have distinction between VP, SVP, and I think that’s actually the sweet spot.

You kinda wanna be in a place where it’s clear who is ultimately accountable for a particular function. You don’t want just everyone to be an IC. So that’s why I kinda like this, you know, head of because it makes it clear, but it also doesn’t box you out from one day, you know, hiring an executive from the outside and bringing them in and making them, you know, something that maybe they’re more accustomed to. The one thing on titles that I do think is important to recognize that at least in some circles, in particular the Bay Area, anything with the word found in it, founding, founder, cofounder, has a certain weight that is hard to ignore.

Like, you you you’re kind of so I don’t think you should be dismissive of that concept. And to be a founding engineer is so much more meaningful to somebody. For example, if 80% of your friends are are founders of companies and you are just a software engineer, but you started your first employee, like, that just psychologically, I think, makes it hard. You’re you constantly have this pull. Should I just go and then many of your found friends, by the way, who are cofounders, these people are these people are founders?

Like, I could do this. And so you mitigate the risk that somebody’s gonna go off and try to start their own company and call them

Yeah. Yeah. Right. Well, what do you see as the downside though? What’s the downside of calling them a founding marketer?

I one say one thing I’ll say about titles that I unequivocally believe is that if this is something that a candidate brings up early or even during the interview process at all, it is a pretty red flag. It shows you kinda what their values are. The best people I’ve hired are people who’ve come in with really fancy titles, and the topic of titles didn’t even come up. You know, they show up. They could have been, you know, CTO or principal, they show up, oh, a engineer.

No no big deal. That is such a positive sign when title is not something they’re overly fixated on. And, you know, it shows that they care about the problem. They care about the company. They know that if they do well, they’ll grow within the company. So that is one thing I think is you can you can say almost unequivocally, like, somebody coming in and this is one of the things that they’re sort of focused on. It it tells you kinda what their values are and what they’re what’s meaningful to them.

I generally feel like people should comp better than they think. You know, I think especially startups where you have some semblance of funding. We’ve been lucky that we’ve gotten, you know, great funding from almost the beginning. So I don’t think it’s fair to say that you should punish people when it comes to cash comp if they join a startup. You know, obviously, you can’t match what some of the highest company OpenAI is paying millions of dollars and Google and Microsoft. You know, you can’t match that, but you can still pay, you know, seventy fifth percentile in in terms of cash, and it shouldn’t be a huge lifestyle change just because they’re joining a startup.

I think that’s a you know, ten years ago, that was this idea that you’re exchanging, you know, risk for reward, and you should, like, punish people when it comes to salary. I feel like if somebody who’s great has a choice between working at two startups and one startup gives them a lot of equity and little cash and a lot of equity and a lot of cash, they’re gonna take the latter. And you wanna hire great people, not hire people who are willing to accept, you know, the marginal efficient salary that you can offer them.

So that’s my philosophy. I also compensate pretty internally fairly. Like, I operate on I on the model. If everyone knew what everyone else made, they’re like, okay. That generally makes sense. So, you know, for example, you know, we hired somebody, a great software engineer. We thought, wow. Actually, the market is showing that this person should be 30 k more than the other folks on the team. And so not only did we hire her at that price, but we also raised everyone else’s salaries to match because we didn’t feel like it was appropriate to sort of punish somebody just because they came in earlier even though somebody else later, the market showed should be should be paid higher.

I have a pretty nonconformist view on secondary, and I think this is gonna get me some trouble because most of my investors feel the exact opposite, which is I think that you should let early employees who have vested their stock sell their stock at any point. You shouldn’t feel like the vested stock is yours. If they’ve vested that stock and if they’re working at your company, that should be almost as close to compensation, you know, psychologically as as cash is. If there is a willing buyer, obviously, you wanna make sure you don’t cause a distraction and your employees are going out and trying to find buyers.

But for us, for example, in our Series A, we’re way oversubscribed. We actually have we we raised our Series A over a year ago, we haven’t even started spending it. So we had far more investors who wanted to invest than we had, you know, capital to sell them. And so I gave our employees a chance to sell up to 25% of the rest of the stock. No judgment. Like, it wasn’t frowned upon. And in my theory, and we’ll we’ll see if this proves out true or not, my theory is that is more retentive, not less retentive.

To give people the opportunity to view their stock as more liquid, I think, you know, it’s kind of most what most investors would tell you. Most investors say, you know, give them golden handcuffs, force them to stick with you. But I think that, again, that’s kind of an antiquated notion. Assuming that there isn’t market liquidity, then they can’t go elsewhere. So I’d rather be thought of as the startup that lets people sell their vested stock and give them more stock as they continue to do well than sort of treat stock as this sort of, like, lockup that you can’t that you can’t sell.

Not as much. I mean, that is a possibility. We don’t have that now. We also tend to hire more senior people. Like, we don’t hire people straight out of college. We hire people with experience. So we’re not hiring people who are super early in their sort of wealth accumulation. And and so in general, I don’t I don’t I don’t feel that vibe. And by the way, we also it’s not just at company primaries. If there are secondary buyers that have been who’ve come in between rounds, we also give the opportunity to employees to sell then.

So if you’re able to, which is, again, maybe not always true, if you’re able to offer liquidity and you have a willing buyer, doing that, you know, every six months or something, I think, is a healthy thing. It or it relieves the pressure for some people, especially people living in the Bay Area. And there’s something about that ability to provide that liquidity, you know, that makes you know, if you’re able to be the difference between them being able buy a house or not, I think that engenders a certain amount of retentive power that is very hard to do any other way.

So I think it’s worth it.

I used to do that. I do think for the most part today, the best team is a small team that is tightly aligned, highly focused. And typically, you know, if you think about a team as every person has opportunity cost and you’ve got n squared connections between people, If given a spot, you could hire somebody straight out of college for, you know, less money or somebody who is has five or ten years of experience. I would rather spend more to hire the more experienced person and keep the team smaller than sort of bloat the team by just filling, you know, butts and seats.

With 20 people today, I feel like we’re having a greater impact and ship faster than we ever could with a 120 people in software engineers at Optimizely. So that’s working, and I just don’t wanna mess it up by hiring a bunch of junior people who kind of you know, they there’s this old saying, the best way to slow down a project is to add a person to it. So I don’t wanna do that. I don’t wanna hire a bunch of junior people and help train them and to have that at the cost of our velocity, which right now is very high.

This is one of those classic things that investors tell the public, and most founders don’t know the counterexamples. Like, there’s a bunch of things that are all in the founder or investors’ interest that are sort of in the lore of how to raise money and what’s accepted, what’s not. And and rarely do people see the exceptions. And so this is one of those where, like, yeah, the best investors, Benchmark, and recent, they will invest less than their supposed minimums for the right company. You can’t call your shots if you’re not doing well, but if you’re doing well, you shouldn’t assume that just because you’ve seen that somewhere for the average company that those constraints should necessarily apply to you.

And I think minimums is a perfect example of that. Even if you talk to LPs of great funds, you know, they promise these LPs a certain set of investment theses and portfolios. But if you talk to LPs and said, hey. LP in in big successful venture fund, would you like that fund to either yes invest or no invest in some of the best companies? Let’s say the best likely company of the year. And if they say, well, the only way to do that is for less than the target ownership percentage, every LP would say yes.

I’d much rather get 1% of the next, you know, Google than 0% if that’s the constraint. So that’s why I disagree is because I feel like a lot of founders, they just fall into the pattern of what they think is common wisdom, not knowing that there are many exceptions to all of these sort of standard, very much investor favored terms.

Well, I appreciate that. But I also did this before I was me. In my very first Series A, I got, you know, I got benchmarked to agree to, you know, I think it was maybe 8% or something.

Yeah. So this is 2013. Peter was the first person I had met. In fact, it was a very memorable conversation. It was also very competitive, and that’s why it led to this, I think, them willing to sort of flex. And, obviously, you know, they had certain constraints, and I was able to meet them. And it was a negotiation. You know, that’s the thing I should say is that it is a negotiation of which every negotiation, everything is up for negotiation. And in exchange for less ownership percentage, they also got a lower valuation.

And so I do think that is something to consider. Like, you you that’s maybe if I go if I zoom out and and just generally around fundraising, I think some of the most common mistakes founders make is they’re not empathizing with the investor. They don’t understand the world from the investor’s point of view. They’ll take, like, a clip of me on your show and say, oh, Dan says get, you know, less than 10%, and they think that that that their job is to get everything, everything, everything for them, when really, often the best negotiations are when the person on each side of the table is thinking about what motivates and drives the other person to the other table and other side.

And if you find common ground, you’re able to negotiate one thing that doesn’t happen to matter too much to you and matters a whole lot to them, that’s a great way to trade something that you really want for something that they might really want. So

I think it’s fair to give on valuation. You have to recognize that the person who’s investing, many times, depending on where they are in their career, they’re putting a lot of reputational bet on you. And so you need to give them the thing that they can tell other investors when they’re at their fancy Utah ski conference, and they’re like, oh my gosh. You invested in this company? Like, you did the public fundraise with with Rewind then? You know? And you need to tell them, no. Actually, here’s the thing that I got that is so valuable.

And every other investor on their peer group says, good for you. Add you know, attaboy, attagirl. And so you recognize it. Even just thinking about what did it take for that person to be able to do that, I think, is important because that’s how you get somebody to feel like you know, every negotiation, you’re compromising, you want them at the end. You know, you gotta work with this person. You know, you don’t wanna extract every little you know, you don’t wanna squeeze them dry so that, like, the day after the term sheet and day after definitive doctor sign, there’s a whole bunch of resentment from day one.

So I think that’s important is recognizing where somebody’s coming from and how you can give them some wins. That’s different for each stage and every investor and that but it starts with empathy. You gotta understand where they’re coming from.

I’ve been lucky not to have a board for for Limitless. I do think, generally, boards are helpful for first time founders, and, of course, the right board members can be helpful for any company. I think it was Vinod Khosla who said something like 80% of venture capitalists add negative value to startups. I don’t know if that’s true, but he’s met a lot more venture capitalists than I have, and I’ve certainly worked with a lot of really, really great venture capitalists. Often, best advisers and the best venture capitalists I’ve had didn’t need to be on the board to be helpful.

You know? Elad Gil is a good example. I I quoted him earlier. Like, that was a very pivotal conversation. That was just somebody who happened to be a small investor in our company who I called, and he answered, and we had a conversation. Those are the kinds of things that can be really meaningful. I do think boards as a company gets bigger and bigger, closer to going public are really important for governance and accountability. But when the company is so early on, very, very hard for a board member to get up to speed.

You know, they’re they’re showing up once a quarter, and, you know, you have the context of being the founder. Ultimately, the board may not have. So I generally think, you know, if you’re a first time founder and you find somebody who has who’s aligned around the right values long term, it’s probably worth doing. But I don’t again, it’s one of the things you shouldn’t assume that you have to do every time you raise money.

Yeah. I it’s actually interesting. Like, each fundraise I’ve done, I think, you know, I’ve raised probably 280,000,000 in my career over two companies. And every time I’ve done it, I’ve actually done it a little bit differently. It’s also very much my process for honing my pitch, which is, you know, like a stand up comedian goes to these rinky dinky bars on a Wednesday afternoon or whatever to learn what works and to stick with what works. And so for me, each time I’ve raised money, I’ve actually done it a little bit differently.

A year ago, the most recent time, what I did very differently and worked really well, I broke this sort of conventional wisdom that you should do a fundraise in private and just, you know, go down and meet the five investors everyone says you should go talk to and hope they say yes. Instead, what I and and so let me just draw an analogy why that’s so ridiculous, how, like, 90% 95% of companies raise money. Imagine and I’ll just start with, when you add an investor to your company, especially if they’re a board member, that’s like getting married to them.

It’s actually harder because you can’t really get divorced. It’s getting married without the possibility of divorce. And if you wanna be at your company for five or ten or twenty years, that’s a really, really big decision. Now imagine if your jaw if if you wanted to marry somebody for love and the only way you could find the person you wanted to marry was you had to drive down this one street in Menlo Park called Sand Hill Road, you had to go down five beautiful offices and pick one of those five people.

If that was the only method by which you had to decide who you’d marry, you would think that’s ridiculous. And now, you have the possibility with social media to do the opposite, to do what Tinder or any great dating app lets you do, which is cast a wide net and see who’s a good fit for you. And that’s what we did with our last fundraise, which is we cast a wide net. It started off not really actually as a goal of fundraising. Was really trying to build trust with customers around our business and showing them we’re going concern.

And the byproduct is, you know, we put our deck out. You can see it’s about seven minutes. It kinda went viral. It had a couple million views and thousands of offers to invest. We ended up getting many offers at a huge distribution of valuations. And we ended up with a partner who, yeah, we could have perhaps found down Saint Hood Road. There were actually an office there. But ultimately, I felt like that was the best path. Who did you choose? We we chose NEA, which has been a great partner.

NEA has a very and the thing I loved about NEA, still love, is they have a very long term orientation. They’re often buyers at the IPO. They’re not sellers. So that was the thing that drew me to them, and there’s so many things in there, both acts and words that really reinforce this, especially as I talk to references and other founders that they took took money from.

No. Absolutely not. In fact, always taking the highest price is almost certainly gonna be a mistake. I know now because I have real data on this. So I actually have a distribution of the valuations we got from the last Series A. We had offers, actually, we had 22 offers at a billion dollars. We turned them down and took 350. So we chose we actually have this distribution. I can share the deck if you want or the graph if you want. But if the you know, the most common was 200.

We had several folks between 300 and 400, and we had a handful of outliers at a billion. We not only chose $3.50, but we also invited everyone who offered more than three fifty. If it made sense, we invited them to be part of an RUV, a roll up vehicle, to participate even a little bit in the round. So we got kind of this benefit of great lead investor and this wide net of hundreds of smaller investors who then are sort of evangelists and supporters, and, you know, they’ll help retweet things when when we post launches.

So we had kind of the best of both worlds.

It is a factor for sure. And you have to again, it goes to empathizing with your investors. You have to think through the world from their point of view. And especially somebody who’s you know, if if somebody says, I wanna invest in Limitless, and they’re saying to their partners, look. And I think we should invest in this incredibly high valuation relative to revenue, that you need to understand that they need to be armed with the right evidence, motivation, desires to do that. And if one of the, you know, headwinds is, oh, by the way, hold on.

Looks like Andreessen, Aurois, they invest they they did the seed round. Like, why isn’t Andreessen leading this round? Like, you need to have a good answer to that question, and that’s something that I do think most founders don’t recognize. It comes back to empathy. You have to understand. For this person, it’s likely, almost certainly, you’ll get one person at a firm. If you got a good company or doing something well, it’s almost impossible not to get at least one person at a venture firm to love what you do.

Your job often is to get that person armed with the data information and support to convince their partners that it’s investment worth making.

Well, first thing I’ll advise you is I wanna just demystify. When an I wanna share some code that you may not know. When an investor asks, how much are you raising? What they’re trying to do often they may actually wanna know the literally the amount. More often than not, they’re actually asking, how much do you think you’re worth? And let me let’s start the negotiation on valuation right now. Because, like you said earlier, often, you know, 10% or 20%, let’s say 20% is what they want.

If you say, you know, we’re worth yeah. We’re raising 10,000,000. They just take 10,000,000 divided by point two, and then that’s what they think that your valuation that you think your valuation is. So instead of answering the question how much you’re raising, the best answer is, you know, we don’t need to raise, so we don’t have a budget we’re driving. We wanna sell no more than this percentage of the company, and we’re letting the market decide the valuation. That’s how I frame it. It kinda pisses off investors because it doesn’t play into their game of again, it goes back to when they write up their memo for their partners and say, okay.

What what valuation should we go in? You know, it doesn’t give them what they need, so they get a little frustrated. But I usually say and the other thing, by way, that I think frustrate so many investors, I’ve been doing this for ten years. I and I I probably need a better answer. But oftentimes, people ask me a very simple question. Are you raising money? And my answer almost always is is never yes or no. They want just a yes or no. Usually, it’s some version of, well, no, but if over the next week we get a term sheet we can’t say no to, we’re probably gonna take it.

So that’s something, you know, you also gotta recognize that are you raising money? Yes. Causes them to then have this perceived clock that, okay. If they haven’t raised money in three months or six months, then what do the other investors know that I don’t know? So these are small little traps that you can fall into. But at the end of day, don’t think it really matters that much. These are all sort of marginal benefits you get from sort of understanding where the investor is coming from.

So this is actually something you can think about and be proactive about upfront. I’ll So give you an example. Last year, when we did this fundraise, we did this kind of in public. We put the deck out, and then for any of the people we felt were good finalists, we gave them a Calendly link for the first meetings. And those meetings are all one week, so no more than one week. And that’s another benefit of doing this in public is you can do it all in parallel.

If you’re just taking investor meetings willy nilly as they come, you get into the exact problem you’re describing, which is you might get a term sheet from one investor, but you haven’t even started the meetings with another that you actually wanna work with. So I do think thinking about how do we structure and sort of calendar out the raise ahead of time. For me, it was all first meetings are one week, and then everyone asks, oh, how’s our round going? Oh, this and I just tell them, like, this week, from this date to this, it’s first meetings.

I’m having, know, final partnerships meetings. I have three final partnerships meetings next Monday and then two more the following Monday, and then they have transparency. They the thing is they’d also don’t wanna miss out. So it’s actually a mutual benefit. They the investors who haven’t given you the terms yet, they wanna make sure they’re not too late to the game, and then you just set expectations with everyone that, like, that’s your calendar, and and I’m gonna make a decision by x date, then they work backwards from that.

So I think if you don’t set those constraints, you end up in exactly the the situation you want, which is, by the way, what investor the investor who’s giving you that term sheet wants to preempt it. They wanna get in early. They wanna get a better price, and so they know that if they do it before you’re getting information from everyone else, that’s gonna help them. So you should just work backwards and try to avoid it.

Absolutely.

And I think there’s definitely some truth to that, but I also think the the opposite, like, when somebody when an investor and usually some associate reaches out and says, hey. We really love your business. We’d love to catch up. That’s them kinda being transactional too. That’s their full time job to get meetings booked for their senior partner. And when you meet with that partner, it’s not really building a relationship. It’s them evaluating you to be deciding should we preempt their next round. Not to say that you should treat their lack of relationship building and transactional nature with your own, but you can very quickly get up to speed with a lead investor like I did with NEA by doing a ton of references.

You know, as soon as it’s clear that you’re gonna potentially, you know, get married and take a term sheet, in that moment, you can ask them. Like like, give me the contact name of every founder you’ve funded in the last five years. And, you know, even Peter Fenton did that. You know, Peter Fenton, when I asked for references on him, at the time he was this, you know, amazing luminary, I asked him for references. He gave me 12 founders and CEOs, their phone number, their email.

He didn’t even introduce me, just to just reach out. And I got this great conversation to talk to 12 amazing people. I talked to every single one of his references, and that’s how you can really get to know somebody. You know, the sell part, when they meet you during the fundraise, you get a really unique narrow view of them. You really get to understand a person when you do the references on them afterwards.

I very much believe you should either be in fundraising mode or not. The one thing I actually really recommend so before I did this public fundraise, the way I actually practiced and actually got the story and a pitch right was anytime prior to that, some investor would reach out. I would actually send them a Calendly link for my investor week. It was it was a week somewhere usually, it was, like, once I didn’t think at the time I was doing it maybe once a quarter. Now I do it once every two quarters where I just I do back to back, usually associate meetings where you hone the pitch over and over again.

And I just when they reach out, I say, hey. Super interested, but right now, I’m not fundraising. If you’re interested, book a time. And so you build up sort of these bookings that then the week comes and then you’re in investor mode. So you can get out of product mode or customer mode. You’re not kinda distracted along the way, and you you can really, really hone a pitch. When you have, like, 30 back to back associate investor meetings where you’re practicing your pitch and tweaking the deck every single meeting.

By the end of that, you have this really, really honed product, like a stand up comedian, like I said earlier.

Yes. I mean, I’ll say yes, but I’ll say yes in a way that’s probably reinforcing the part of the Twitterverse that think associates don’t have much value. I view them as practice. I view them as if I can get past a and oftentimes when I did this, these are associates who didn’t even Google me ahead of time. They show up ten minutes late to a thirty minute meeting. But if by the end of that meeting where they care they they’re just nailing it in. They show up.

I use those twenty minutes I have with them to really nail it, and I really practice my craft. In the same way that Chris Rock will go down to New Jersey, you know, the the dive bar and nail if you can nail your craft there with a twenty minute disengaged associate who doesn’t really understand your business, you can really nail it with the people who understand your business. You know, I know others disagree. Some people think you know, think Keith Wabbos said, like, you know, the the questions you get from a truly great investor are different from the ones you get from an associate.

And there’s definitely some truth to that, but I think that by nailing it there at minimum, you know your deck is polished. You know you’re answering all the right questions. You’ve heard a lot of the objections ahead of time. For me, my secret is I probably shouldn’t give this away, but anytime I get a question there, I almost always either change the deck or I’ll add a slide to the appendix. So if I ever get that question again, it’s very impressive to somebody, I think, when you say when they ask you, oh, well, what about Apple?

How are you gonna compete with Apple? And they say, oh, let me pull that up in the appendix. And I have, like, a beautiful, well articulated, with transitions, slide in your appendix. If you can answer their question with a slide you’ve already prepared your appendix, you at least show the investor that you’re prepared. You’re not just winging it. So that’s another reason I I meet with associates is to build up my appendix.

That’s exactly right. That’s exactly right. Oftentimes, especially, I found this too. When you you you very quickly can tell if the person you’re meeting with, they just they have an inclination they want to invest almost from the beginning. And all of their questions, you’ll find out, actually, I think, are often the questions they think their partners or the senior partner at their firm will ask them. So they just want free give me some ammo so that when my senior partner comes back to me and say, wait.

Hold on. How is this differentiated in AI, and isn’t this commoditized? And how are you gonna pick something in the app layer? You have all of the things ready to go. You sort of, like you’ve done their job. You’ve sort of done their homework for them, and that’s when you and you’re in a good mood. When you’re in a investor meeting and you can kinda get this vibe that they’re asking the questions, not because of their interest, but because they’re about to go sell their partners.

That’s a good sign.

My thing on this has actually changed quite a bit. I think the best investor you can have for your company is somebody who’s on the rising arc of their career. You want a Peter Fenton when he’s 35, not 45. You want not not them to be ageist, but you want somebody before they’ve had their first IPO. You want them to be the person who’s going to have it. You’re betting on them just as much as they’re betting on you. Because what happens when somebody’s had a lot of success and no knock on the people.

I’ve got to work with amazing investors who had a ton of success, like Peter Fenton and Marc Andreessen. Like, they’ve had a lot of success. Like, for you to truly be the difference in their career or not is pretty unlikely. And so you want somebody where they just in their bones and in their pocketbook, you are the difference between them reaching the pinnacle of their career. And so that’s, you know, the same way that you’d rather get, you know, an NBA player, you know, who’s in the prime, not somebody who’s on their way out of their career.

And they’re they’ve they’ve done great things, but I think you you get the best out of somebody when they are when they’re aligned around trying to build something with you, not because you’re just a fancy logo on their, you know, many logos of public companies they’ve they’ve taken.

The thing I noticed is, well, there’s some investors who just out of competitiveness, I think more than anything, are gonna be helpful no matter what. They just can’t not be helpful because they just feel like it’s kind of in their DNA, but they’re not doing it actually rationally. Like, if they were rational, they would probably spend more of their time on the other parts of their portfolio where they could have a bigger, you know, IRR impact to their fund. And so there’s a certain set of investors in that camp.

There’s others who, you I’ll be honest, you know, at some point, it was clear that Optimizely was gonna be okay. You know, we sold for a nice outcome, but it wasn’t a multibillion dollar public company. And I could tell some of the other investors were like, okay. I’ll do the, you know, minimum necessary. I’ll show up to the board meetings. I’ll do the work I need to, but I’m not gonna bend over backwards to help recruit you the best head of engineering I can possibly find.

That just happens. You you have to know that too. For for a period of time, you’ll be the darling. You’ll always have them if you raise money for a period of time even after you raise money, you’ll have this darling effect. But then quickly, you know, as if they’re being highly rational economic, you know, investors, they’re gonna allocate their time proportionally to where they can have the biggest impact. The way I sort of you know, it hurt a little bit in the moment when I sort of recognize that, but you also gotta understand, like, it’s a business.

They’re investors. That’s rational. You’re the founder. Your job is to make the company successful. You can’t outsource. The the one thing that really kills me is when I see a founder playing the victim here and say, well, my investors didn’t help me enough. Like, it’s not their job. Their job is to give you money and hopefully do no harm. If you got some help along the way, great. But, like, your job as a founder is to make it succeed. And so playing the victim and assuming your investors is the reason you’re gonna succeed or not, I think, is a is you’re lying to yourself and lying to your investors.

I think it helps. It doesn’t it’s not the difference maker. I think it helps with recruiting. Great, great talent can work anywhere. And if they have the choice between a company that’s got, you know, great marquee investors who, you know, who’ve done their homework, that derisks the founder to them. That derisks the company. So I think that’s probably the most tangible benefit. It maybe marginally helps with customers. I don’t think so. For b to b, maybe in the enterprise, it might help. But for the most part, I think it it helps build a movement and sort of traction and momentum in the market.

It probably scares off competitors. I did notice this that one of the benefit side unintended benefit side benefits of of the round we raised, I do think kind of made everyone else’s job who’s a founder trying to compete with us much, much harder. Because first of all, we had hundreds of investors. So now that all those are conflicted out, and you get this sort of momentum. It’s like, oh my gosh. How are you like, all the questions they’re getting, their appendix, appendix slide number one is how are you gonna compete with Limitless?

You know, how are gonna compete with with us, especially given, you know, all of the the who’s who’s invested. So that probably helps. Maybe I don’t I don’t appreciate that quite as much. I haven’t heard that, but I assume that’s happening as well. So that’s one benefit.

At every stage up until the very end, they’re pretty well aligned. You know, you get into these situations near selling the company where maybe the motivations and incentives are slightly out of alignment. I think a lot of founders actually have a very binary view on outcomes. They think either it’s gonna go to zero or it’s gonna be a multibillion dollar public company. We’re actually, I think more likely than not, they’re discounting kind of the middle of the road outcome where maybe it’s, you know, two x what you’ve raised, you know, or three x, or maybe it’s slightly more.

Things like liquidation preference are really important. And, you know, so I think those are the kinds of things where you do need to model out and think through what are the different middle of the road outcomes and how you might be misaligned there to make sure you’re not, for example, raising too much money and then getting to an outcome where, you know, investors have a very, very different financial know, you know, they’re basically like, for example, I’ll just make it really plain. If you sell your company for as much as you raise or slightly more, the difference between as much and slightly more is incredibly meaningful to your employees, makes no difference to the investors.

They basically get one x back. So in those situations, you really gotta be thoughtful around how you want to raise and also how you structure that. Never take more than one x nonparticipating preferred liquidation preference. That’s when things get really out of alignment.

I mean, I think it’s it’s very possible, especially in a situation where during Zerp, a company raised at x valuation, and they have too much pride and fear associated with that valuation, and they’re afraid of taking a down round if they need more capital. And so they trick employees by saying, hey. We raised an up round. But behind the scenes, what they really did was they added, like, a two x liquidation preference, which almost always means no employees ever gonna get any of their stock worth anything.

So I do worry about that. But if you’re a founder listening to this and you’re contemplating an up round with a liquidation preference more than one or a down round, do 100% of the time, do the down round. It is much better for you as a founder with common stock. It’s much better for your employees. It will hurt in the moment when somebody says, oh my gosh. This company that I thought once was worth a lot of money to ensure is now worth less. But that’s fine.

They’ll leave you or hire somebody else. Like, you’d much rather be in a company with less overhang on the valuation, on the liquidation preference than one without.

They don’t recognize control as as important thing to maintain. There’s the same ultimate camp, which is like, you know, you gotta trust people at the, you know, small percent risk that you’re gonna get screwed over. This was before he got screwed over. So, he had a very kind of like, you know, you do right for the world, and it does right for you. And, I wonder if know, I should ask him what what he thinks now. I do think when you think control and you think governance, you shouldn’t view it as you’re offending an investor.

Like, an investor was highly rational. They would also ask for and want as much control as possible if they were the founder. And many former founders who are now investors investors understand that. They wish they had more control. So things like supervoting stock, I think you should make sure to ask for multiple board seats you should ask for, not having board members. Maybe I’m board observers instead of board members for certain investors. It’s hard to ask because it kind of can feel a little personal, I think, because, like, woah.

You don’t you don’t trust me? But at the end of the day, you’re just being rational. You, as the founder of the company, are actually, as a fiduciary, responsible to represent the interests of the common stock, and that’s your employees. You know? And and so if you wanna do best for your employees, you want to rationally control as much as you possibly can around the outcome of the company for them. So advocate on their behalf and likely your own because you’re also likely a large common stockholder.

Be willing to push for things like supervoting and and multiple board seats. Do

most investors get in the way? No. I don’t. Actually, I think more likely and I have some of the world’s best investors, and now I’ve come to accept that, like, they’re busy. You know, I’ll send an investor update. You know, we have, like on my investor update list, we have maybe 300, 200 people. And, you know, I’ll get, you know, on a good email, maybe 20 responses or, like, you know, something and or if I ask them to do something. But most people do that we’re just one of many companies.

So you just gotta recognize that, like, even great investors, you’re just one of many.

I actually do the same. I have a few angel investors. I do the same mostly because when I don’t get those back

Alright, Harry. Well, I’m gonna add you to my investor update list, and I will look forward to just for the for the attaboy or good job or here is how I can help. You sold me. Honestly,

It was probably the first meeting I had with Peter Fenton in 2013. I think it was mostly the most memorable. The first reason it was memorable is because he came in with this entire contraption around his knee. He could barely walk. And the reason was he had just been helicopter skiing and he, like, broke his knee or something. We still showed up to the meeting. He then, by the way, he, I think, has a similar kind of dynamic with me where he has to sort of prove to the world other things.

Anyway, he went up to learn how to fly a helicopter after that because he wanted to conquer the thing that had broken his knee. Anyway, the reason I remember it because the the I remember so vividly the very first question he asked me, which at the moment, I had no idea why he’s asking or why it matters. And now, with hindsight, I totally get it. The very first question he asked me was, Dan, what’s gonna get you excited to be at this business in five years?

And this is 2013. In 2018, exactly five years later, it was exactly when I started to feel trapped, resentful, disengaged, going through emotions, and he exactly astutely figured asked and pointed out, and at this time, probably gave him some answer that I felt was true, but if I had really listened to that question, I think I could have done a much better job of staying in love with the business. Because I think what he found basically, and maybe this is just his track record or or is the the companies he’s taken public, they’re all founders who have just been perseverant, who can keep it up, who who stay in love with the business five, ten, twenty, thirty years into it.

And I think I I mistook that question as, oh, that was an interesting question. You know, I thought it was maybe he was trying to flatter me. He’s like, oh, he wants but it was really actually trying to understand what motivates me, what drives me. And that’s something I’ve definitely learned with Limitless. You know, I will be at Limitless in my life’s work. I’m gonna be doing this. Even if we failed, I’d be proud to have done the kind of problems we’re trying to solve. That was probably the most memorable meeting.

I think the most important thing to do if you’re an investor today is find founders who are obsessed with problems, not solutions. Many founders, especially ex crypto founders, tend to think of AI as the solution to all the problems in the world, and they’re they’re actually technology in search of a problem. I learned this anti pattern at Google, actually. I started my career there as an associate product manager, and Google’s notorious for building products that are technology in search of problems. Google Wave, Google Buzz, Google Glass, like, all of these products were basically some smart engineer or technologist starting the sentence with, wouldn’t it be cool if dot dot.

So if the startup you’re evaluating or the technology you’re considering began with the origin of wouldn’t it be cool if dot dot, and the the cool isn’t problem, the cool is technology in search of a problem, then I think that’s a very strong anti pattern. I would focus and that’s the only custom companies I really invest in today are companies that deeply care about the problem, and it just so happens that maybe AI or technology can solve it. It’s not that they’re sort of wed to this ideological idea.

So I think that’s the filter you should use. It shouldn’t be is it app layer or foundation layer? It shouldn’t be first time or second time founder. It’s, is this font founder obsessed with a problem in the world? Is the problem real? Are there other people who have that problem? And do I have confidence that this founder will persevere to try to solve that problem? And maybe have some of the skills necessary to use technology to do that, not, oh, cool. It’s it’s like, you know, Mistral is the latest, greatest.

You know, those things are ephemeral. I would focus on problem obsessed founders.

Yeah. I mean, I think every problem can expand over time. So I don’t think it should be so much is that the problem big enough or small enough. In in some ways, actually, you kinda wanna choose founders who are excited about smaller problems because it tells you that they’re they’re not just falling in love with what they saw on Twitter or social media, that there’s actually something they care about. And the best version of that story is, hey. At my last company, gosh, it was so annoying that we had to do blah.

And now, you know what? I started this company to try to solve blah. And it’s like some niche thing. You know, I think Coinbase might have been similar because, you know, Brian had seen things at Airbnb or you know? And so you want somebody who both firsthand saw that problem and maybe felt it themselves. The best CEO for a AI customer agent is somebody who started their career answering customer support calls. You know?

Like, that’s what you’re looking for is this founder market fit around the problem, not somebody who’s like a McKinsey consultant who said, like, if their first slide is, here’s the market map and here’s the market size and, you know, here’s the niche we’re gonna you know, that’s very, very to me at least, and I’m maybe I’m I’m missing out on good companies, but to me, that’s immediate red flag. You want somebody who understands the problem and just couldn’t sleep at night if this problem wasn’t solved.

And maybe there’s 100 other companies out there, but, you know, this one is the one that will succeed because the founder cares so much about the problem and understands the problem. And let me just give you some some empathy for why that’s so important. I found when we started Optimizely, the the thing that made it work and I had, like, two failed startups right before that I can explain. But, basically, the thing that clicked for Optimizely is it was the product I wish I had in the Obama campaign in 2008.

And because I had used a b testing from Adobe and from Google, I saw all of the pain points. I saw what was so hard about those products, and it wasn’t the lack of features. It was in fact the opposite. What you wanted in the product in the market was something that didn’t require a developer was what you could see what you see is what you get. And, you know, and we didn’t we did not do a lot of things that McKinsey consultants said you should do.

We didn’t have multivariate testing. We didn’t have all these things that’s, some outsider would have said was necessary. But if you’re an insider, if you’ve done the problem yourself, you know very quickly what matters and what doesn’t. And so as a founder coming into a new market, if you’ve been the person doing customer support calls, you know the problem so much better than an outsider who has it. So that’s what I would vote on, and and that’s what who invested.

This is one of the things that I think the CEO really needs to lead on because it’s very hard for anyone else in the company to say no, especially when it comes to customer says, have this problem, and you an engineer who says, I know how to solve it, and then you end up with a product that solves a customer problem. By itself, that’s not that bad. You know, that’s good that you have engineers who are empathetic and listening to customers. But that times a 100 features, you end up with a bloated product that isn’t really focused.

I do think as a founder, you’re able to take in and understand and sort of intuit the market, the customers, investors. Ideally, you have a good enough understanding of the technology to understand the effort necessary to build things, not just the effort to build it upfront, but the effort to maintain it. So you you have to know that everything you build, I have the saying, you know, around building features that no good deed goes unpunished. I think I’ve I have to I’ve never seen a situation where we’ll ship a little feature and we’re done.

It’s always like, oh, shoot. Then there’s this edge case we didn’t think about it. Oh, that’s only person who wants to do this other thing. So you it’s like opening a commitment that you don’t have to keep beating. So, again, it goes back to saying no. Being decisive, choosing what you think is the most important. The main thing is the main thing should say the main thing. What are the key features that users actually care about? What will they actually use?

At Optimizely, we said no to areas that ended up being huge successful companies, and product analytics is a good example. I tried to buy Amplitude when there were four people. In fact, they were about to raise their I remember we were sitting at, I think, at Chipotle in SoMa with Spencer, and I to this day, I’m so impressed with I just I was offering him insane amounts of money, life changing for him. It was four people, and they took the term sheet from Benchmark instead. That is the one where in that moment, I should have just said, okay.

We’re gonna crush them and do product analytics. I think too much of my ego is associated with that. I should have been more and just said, okay. They didn’t accept our offer. Let’s go just beat with them. We already had the distribution. We had the market. You know, and we could have been Amplitude or more, and Amplitude is now a big public company. Another example is Segment, another area where it was adjacent to what we’re doing. We tried to acquire them. They were later stage then.

They said no. They ended up being successful. So we had these sort of adjacent ideas that were actually really compelling that we saw early enough. And finally enough, both of those companies, I thought, oh, it’s too late. Implementator has got this huge lead, you know. And so I was too too too I guess, down on myself and maybe too ego driven to see it had to be my idea. But I think both of those are things I said no to or got said no to that I should have said yes.

If if if I had to give you any advice, it’s just focus on the problem. Care enough about the problem that in the way you talk about your product and your launch, the problem is very clear. That’s a big mistake I think sometimes founders make is they do this big fancy launch, by the end of it, people are scratching their head. What problem is this whole thing? Like, how does this help my life?

Sure. Yeah.

I probably should have. I kinda regret not doing it. I think I was maybe too much pride and ego that I didn’t need it. YC has a lot of gifts to keep on giving even if you’re a second time founder, like work at a startup, like office hours. So I am very impressed with Gary’s reinvention of YC recently. So I probably you I know, regret it. I probably should have done it again.

Probably Sam Altman or Elad Gil, two folks who have been very helpful to me, who, you know, don’t who aren’t on our board and probably don’t need to or want to be. They’re two fantastic people who have always had prescient advice and sort of deep intuition for the market. It has and have both been honest and candid. That’s the other thing that you often I I need a board member, somebody who doesn’t shy away from saying the hard truth that you need to hear to try to save your ego.

So especially Elad, I very much appreciate that in the past.

It is going to be harder than anything you’ve ever done before. Set expectations incredibly low. If you’re gonna do this well and focus on what you care about, you’re gonna have to cut out a lot of the things in your life that you think are important to you, but you’ll realize very quickly once you cut them out or not. What is so hard? Especially the early days, there’s just these these tiny little human beings who you have to feed and care for who are never stopping.

You have this window of time before they start walking where it trains you, and I think that’s probably why humans have evolved to walk later is there’s just gonna be too much. And I’ve also had this theory, humans in general, and probably kids in particular, have learned to nap and sleep just to give parents a break, because otherwise, parents would just throw the kids away. It’s just too much if you don’t have them napping every so often. And it’s also just it’s it’s it’s physically hard.

It’s emotionally hard. And then combine that with startup, which is mentally hard, by the end of the day, you’re just drained. You know? Like and I’ll be honest, like, I’ve cut out basically I I don’t spend much time with friends. I have basically no hobbies. I’m I’m reminded of this Rick Rubin quote where he’s like, have no technical skills. It’s like that, but for my life. Like, all I do is spend time with my kids, my wife, and work, and I’m happier than I’ve ever been in my life.

So it’s it makes you create this level of focus that you know, and, course, it’s different with one kid versus three. Three kids was it’s just a lot. So that’s what makes it hard. I think now in hindsight, one was not so hard. Three is about three kids too hard.

Well, you know, I’m not I’m not ruling that out. I certainly think now is not the time given all the other things on my plate, and I’m just loving and enjoying. When kids are at this age, like, I didn’t appreciate how nice it is that they just want like, the most valuable thing to them, the thing they love more than anything is just spending time with you. And that is just so special to have a five year old who all they wanna do is just, like, run around the house with you, which I was doing yesterday, or, you know, letting ladybugs go or, you know, planting things, and that’s such a special time.

So that I and with another fourth too, you then have to split your time a little bit more. So I think we’re we’re very happy with things how things are, and it’s only getting better.

For sure. No. I definitely value and appreciate that. And it also creates a certain level of focus in my life that I didn’t have before. You know, I have a purpose, a meaning, and and in a way that, like, you kind of miss if you don’t have and you don’t see. The other thing I love about, you know, this is a very techy answer, but I love watching how they learn and how they grow. Imagining the parallels to AI and AGI and seeing and understanding intelligence and what it means to be human from first principles to witness to see a human being learn and observe the world.

In a world when AI and technology can do the same today, it’s also incredibly lucky and fascinating to be able to do both and become an expert at learning both at the same time has been really fun.

What worries me most about the world they grow up in and today, frankly, is doomerism. It is cynics around technology. It’s people who see, who are clinging to a past that cannot and will never exist, and sort of a approach to technology innovation that is cynical. You know, I think there’s a time when I started Optimizely, 2010, where it was cool to be a founder. Like, even in San Francisco, was cool to be a founder. And then I think, you know, after the bus, the Google bus protests and, you know, it was actually, I think, the movie Silicon or Social Network that actually propelled a lot of people.

That brought in a lot of sort of, you know, wantrepreneurs. But, you know, you you had a period of time where, like, being a technologist was cool. Building something was cool. And I think that was good for society. That was good for entrepreneurs, and that’s not always true. There’s some countries where that’s certainly not true today. In The United States, in particular, you see what just happened in Florida banning lab grown meat. There’s a move a counter movement against technology and against optimism that I think could be really dangerous, and we could go into the dark ages.

You know, we had that that’s happened once in at least once in the history of society, and that that Do not think

Maybe I don’t know. I mean, governments have control. You know, they can do things to you, and all it takes is one or two bad policies here and there. I mean, we are not that far off from regulatory capture around AI models. The the the unfortunate challenge is the doomers are on the same side as the regulatory capture, and there’s a lot of money at stake. So, you know, doomers plus regulatory capture, I could see creating a world in which a lot of AI innovation is is stalled.

And and you add to that that in order to do a lot of foundation model AI innovation, you need to spend a lot of money. So, you know, if it were true that it was, you know, as simple as, you know, for example, the Internet where you didn’t need a lot of money to start an Internet company, you could ride off of the distribution the Internet was naturally giving you by having more people joining the Internet. You could just you know, back in, you know, 1996, even 2000, you could just put up a website, if it was any good, it would grow.

And if it wasn’t, it wouldn’t. That’s not so true today of AI. You need a lot of capital. You need, hopefully, a government get out of your way. It’s very possible, like, kids grow up in a world where we look back at today as kind of like the renaissance. Here’s a good analogy. We could look at AI today the same way that before SpaceX, people looked at the space shuttle. Like, hey. We had the space shuttle, then we retired it, and now we just stopped going out of space.

And it wasn’t until SpaceX came around and and new technology was built and entrepreneurs like Elon Musk push frontiers that things get better, and that could very well be true. You know? Who knows? I hope not. I we have a thousand flowers bloom and a lot of startups, and I hope a lot of new innovation, but people are people like to cling to their pearls. You know? Like, technology change is hard, and, certainly, when it can impact your job, I don’t think it’s a 0% chance that the doomers win.

It is likely to have quite a bit of headwind regulatory headwind regulatory wise. And, certainly, you know, the bill is passed, so they got a year to sell it. And, you know, the rumors are now that, you know, Donald Trump’s gonna come in and make the key part of his platform that he’s going to unban it, which might actually work for him. So a lot of this posturing and a lot of government intervention here may be more around, you know, trying to appease what it takes to get reelected than it is actually making good policy.

So I don’t know.

It would be millions of users, active users daily. One of our biggest advantages today is that we’re weird. People look at our product and why would I capture everything I say in here? Like, what’s the purpose of that? And it will go from being weird to being accepted. It’ll be it’ll be like airplane WiFi. You’re like, wow, that’s weird. Why why did and then it’s like, oh, it’s not fast enough. It’s a societal change around the conception of what we do, the benefits of capturing what we say, what we hear, what we see, and using it to to augment human intelligence with artificial intelligence, not replace human intelligence, augment human intelligence.

To me, that would be success in ten years is that our product is taken for granted, and it’s people thinking about today and saying, wait a minute. Back then, you know, you you mean in 2023, when you wanted to remember something, you took out a rectangle that you chopped down from a tree called paper. You had a stick with ink at the end of it, and you scribble things down. And that’s how you remembered? That was the thing you thought was the best idea to remember?

And that people would laugh at that concept. That would be success in ten years.

Thank you, Harry. It was a real pleasure to be on on the podcast and really excited to be here.