#85 AI CEO: How To Make A $10M Business With AI Employees (Amjad Masad, CEO @ ‪Replit‬)

27:09You put in a prompt. You'll say, I want to create an event around X, Y, and Z. It'll create a plan. It'll go get you in contact with the vendors. And she turned a non-scalable business that she had, which is helping people with events, to a fully scalable AI solution. Then she'd get paid for while she sleeps. Yeah, it's wild. One of my biggest annoyances in all my businesses is dashboards. It's always hard to find the exact dashboard, how my brain works, that I want to see stats. Me too. I always want to have scoreboard-based leadership. I can tell instantly, are we behind? Are we in front? What's happening here?

27:46Yeah, I wake up in the morning, I need to look at my dashboard. Me too. Otherwise, I just end up bothering everybody all the time, asking them where shit's at. And so if I can see it, I'm like, oh, here's the project management. I can see if you're red, yellow, green. Are we moving forward? And also, is our business on track or not, et cetera? And so I built one with you guys. And so anyway, I'll show it here. It's not pretty and I'm an idiot at this stuff. So you know if I can do it that anybody can do it. I'm John and every CEO I know who is serious is obsessed with being able to see their business in one dashboard.

28:16You heard him say he couldn't wake up in the morning without looking at the dashboard to figure out if his business was working or not. I'm the exact same way. I do it all on my phone in something that we call the contrarian operating system. It's a dashboard that we teach people to build in the boardroom step by step so that your business can be seen in 30 seconds whether you're going to hit your goals or not. I think CEOs that run businesses without an operating system and a dashboard is kind of like driving a car high speed down a highway without knowing how fast you're going, without knowing what the GPS says to do, and also without even being able to see if you're in park neutral reverse or drive.

28:57And so I am obsessed with what we've built in the boardroom. I think every single business owner is going to want to figure out how to get this operating system and how to get with a group of people who help you implement it. If this is interesting to you, this is all we do in the boardroom is obsess on getting owners to get to the next level with the tools and team they need to hit their next$10 million in revenue. If that's interesting to you, you can click the link and get on a consulting call with my team. If you're like a young person who hasn't figured out how to make money yet, and you don't know what you want to do with your career, but you're curious about this AI thing, what would you tell them to do today?

29:33Where does a young person start? it? I would say, do the same thing that you've always done, you know, get a job, find an industry you like, or you're in sit in, and go into that. And what you're going to find is massive inefficiencies. People do things still like, you know, there's still faxes around in many businesses, people use pen and paper for so many things. Old software still exists. you know um there's so many like whatever field you go into just have an eye for what people around you are doing and and what are the things that could be automated or what ai could be good at and the way to learn what ai could be good at is to spend a lot of time with gpt spend a lot of time messing around with video ai messing around with replit and code ai just be plugged into the AI world, and you're going to build an intuition, just jump into it, you're going to build an intuition.

30:32At the same time, find a real world problem. And the way to do that is to go literally into any domain or incident, and just open your eyes, and you're going to find a problem to solve, and then solve that problem and sell it to the people. I mean, there's this story, I just want to show also that entrepreneurship is not always about taking massive risk, quitting your job, and going for broke. There's this guy, his name is Ahmad George. He works in a skincare company in DC and he's responsible for their operations systems. And he realizes that there's 20, 30, 40 hours a week spent between our team.

31:13We'll probably have more people than we need to do these certain operational things, managing inventory, just the standard stuff. And so he goes to their software provider and asks them, hey, I have this idea on how to automate this. What does it take to make a software like that? And they quote him$150 ,000. And he learned about Replit online and he goes in. And in a couple of weeks, he spent like$400 on the AI and he makes a piece of software. He gives it to his colleagues and they're suddenly cutting it hours down. and he goes to his boss and he was like, look what I did. And I saved this company this much money.

31:56And his boss is now paying him$30 ,000 a year for the software. He didn't have to quit his job. He's an entrepreneur within his company. I love that. I mean, I would do the same thing. We actually, this week, I told one of our employees that I was coming on with you. And he was like, okay, cool. And it was very simple. We have an event that's coming up. I told you about it in November. and I was kind of waiting for the team to build out the event page and get it connected to HubSpot and do all the back of nonsense and get it mocked up and blah, blah, blah. And I think the quote I got was like$5 ,000 or something like that for this website.

32:30And he was like, well, just for giggles. So he goes to Replit. He actually puts together like the entire interface of the design that he wants. And then he used another program. I can't remember what the other one was in order like to actually actualize it and then connect it with HubSpot. But essentially using two programs, one being Replit, he built the entire website and he said he took about four and a half hours. I think I was quoted four weeks for it. And it was just with his plan that he already has. Yeah, exactly. Instead of 4 ,000 or five. And so now I find myself very annoyingly to my employees, often saying like, what's our 24 hour rule?

33:09Anything that used to take weeks, we should just test if we can do it in 24 hours with AI, because then I don't have to be smarter than anybody else. I don't have to be richer than anybody else. I don't have to be better. I could just be faster. And like speed wins every business game, I think. And you know, we're in a moment of potential arbitrage, right? Like before everyone in the world learns that this technology exists, it'll probably take five years, you know, people are slow. You have a moment where it's like an opportunity to create a lot of value and capture a lot of value from it. So, you know, thinking about the kind of advice you give your audience around buying businesses and running profitable businesses, I think now more than ever, finding businesses that are running inefficiently and going into these businesses and figure out where to plug in AI, where to replace SaaS software that's expensive.

34:04You know, a lot of companies pay tens of thousands of dollars for software. You can generate a replica for$5 literally. And so you can go into any business and, you know, shave off a lot of costs and make it a lot more profitable even without growing it. Yeah. When you guys should tell us in the comments, because you told me, you're like, we should do a hackathon. And I said, well, can we do this simply enough for like anybody listening? If we get, if we had them for two hours, let's say they could build something. And you said, this is what we do. You're like, yes, at the end of two hours, we will have everybody have built something that is useful, potentially even valuable and monetizable.

34:39This is our go to mark strategy, actually. Interesting. So you guys, you should tell us in the comments if you guys want us to do a hackathon and we can do one. We can do like a main street every day. I have no idea how to code hackathon. Yep. But you run these now and they work. Yeah. So we, so for example, Well, HG Capital, a capital group in Europe has hundreds of portfolio companies. And some of the portfolio companies were using Replit. And they were interested in that. And so we went there and we ran a hackathon for all their executives, their CEOs. And it's CEOs. They're busy. They're probably getting texts every two minutes.

35:15And it's not like they can focus for the entire day. We told them, just give us two hours of your time. And two hours, everyone had applications. and like, you know, they're so giddy about it, like kids, right? Like they come and they present what they built and they're so excited. And that's what I love. It's like there's a human aspect of it, like making things is awesome. And so everyone's going to get excited about it and most people are going to convert and become users and customers. We've confirmed that we can make money with AI. And yet, like you see a future because you saw this, Jesus, back when you were six, but then also you guys saw the vision for Replit really before AI was here at all.

35:56And one of the things that you said on, well, X that you tweeted was that crucially, it won't be prompting. We believe that's more a bug than a feature. In the future, it'll be a combination of AI predicting what task you want done next and doing it for you, plus a dialogue-based agent that follows your commands. Can you explain that to people? Like what is prompting? And also, what do you see the next evolution of this being? So prompting is the craft of creating an instruction for an AI. Right now, ChatGPT gives you the illusion that you're talking to a person, and it kind of works out for everyday life stuff.

36:38But if you want ChatGPT to go do a massive amount of research or build software for you, like in the case of Replit, or help you build a business, you'll be very precise. and often you need to do these psychological tricks. Like tell it, you're world-class experts and laundromat business ownership. And I'm sure you've done this with Chachipity. And then you basically get the AI to assume a sort of different character for the purpose of that conversation in order to give you more relevant information, right? A lot of people who've used Google for many years know also how this stuff works. But that's also still a little awkward, and that's not how we work.

37:28And the way we work, I think my vision for working with AI should be like working with a colleague. You don't go prompt your – you might give them a pep talk to your employees, but you're a world-class expert. Can you imagine how awkward that would be? but the uh you know what uh what we're trying to work towards is for us to do the prompting for you so having another ai kind of take your take your what you've said and kind of you know transform it in a way to give it to another ai pre-prompted uh but right now it would help like if you go to youtube we have our youtube channel it has some uh some information on prompting so i would suggest people learn prompting right now.

38:11But I think the way in the future is the most important thing is going to be clarity of thought, being able to translate complex ideas into simple bullet points and paragraphs, what we call and kind of tack PRD, product requirement documents, and And being able to have systems thinking, which I think is a very useful tool, and I think it's something you can learn, is really how do you break up large ideas, large concepts into smaller components that you can work on them in isolation. So for any business you want to build, for any tool you want to build out of your business, it probably has a lot of different components, different pages, and that's the essence of system thinking.

39:02and so you can know that you can work on this component isolation. Once I'm done with that, I need to go to the next component. Here's how I'm going to pick up my app or my database into all these different things. And these are skills that can be learned. Like I would go to ChatGPT and spend a few hours learning some of these skills and teach me how to be a better systems thinker, how to create PRDs, how to be a better communicator. But all this stuff will get easier in the future. That's a great point though because you literally use the tool to get better at the tool. And if you can understand sort of first principles of how the tool works in order to make it work better for you, then, you know, that would be like what X would call, you know, godlike prompting or whatever.

39:42That's right. That's right. And also getting crisp about what you know. People know a lot of things. And, you know, I'm sure you've had that experience where someone comes to you for advice and you surprise yourself with the advice you're giving them, right? It's like, oh, I don't know how much of an expert I was at this. which is why mentoring is good, not just for the mentee, but also for you. Like I like to mentor people because it just reinforces what I know. And so a lot of people do not know what they know. And I think that skill of taking what you know and converting it into precise documents is very, very important.

40:21Interesting. And I think that's the skill of writing. It's very true. I do think you can often tell how good of a thinker somebody is by the way that they write. Yeah, writing a book is torture, right? It is. I actually like it. You know what's the torture on writing a book is the marketing of the book. Trying to hit the New York Times bestseller was the most ludicrous, like fake arbitrage. Did you have to bribe someone? I wish I could have. Honestly, if I would have, if I could have, I would have. But I wasn't intelligent enough to do that. But no, it's a lot of talk about an outdated system.

40:52It's a lot of, well, you need the users not to go to the seven places that all users go to to buy books, but the 47 places that the New York Times actually stack ranks in order to determine that editorially the book is appropriate or not. And so it is – I'm sure there would be a way actually to engineer it now with AI and figure out how to reverse engineer New York Times. That could be a business. Yeah, I'm sure. There's probably somebody that does that for billionaires who write books. Right. You know? I want to talk about – I want to get a little bit into like leadership and tech and talent.

41:26So we're right in the middle of what appears to me to be like a great AI talent war. I've never seen anything like this. I mean, I have never seen people traded from one company to another for$100 million publicly or$300 million publicly. I know there was a big drama last week around Windsurf, like competitive years, where they were close to a deal with OpenAI. And then that deal expired. And then Google kind of came in and acqui-hired, meaning that they acquired part of the team as opposed to the entire company. And then another company came in and acquired kind of what was left of Windsurf. I'm curious, like, one, is this the future in AI and tech talent?

42:13Like, will people be acquiring individual talent instead of entire companies in this area? And like, what is your reaction as a CEO where you're competing for all of this talent too? Yeah. So in corporate America, we've had this concept of salary bans, right? With the rise of HR, actually, there's an interesting graph you can look up where HR was basically non-existent over the past 100 years. But as government accumulated all sorts of regulations, HR is is an extension of government in your business in a way. And there was a lot of, I think, good intentions around discrimination and things like that that made it so that HR people wanted to make sure that everything's equitable and fair.

43:05And then there was this, you know, the rise of like salary bans. You know, these are the levels and these are the salary bans for them. And that's often based on experience and not based on impact. You can have someone straight out of college. They don't have a lot of experience. Maybe they're not very good at communicating or working with others, which is a required skill, but they spike in one skill. They're very good programmers, especially like a very niche thing no one else can do. And that could translate into millions of dollars for the company. And that's very, very different than being a factory worker, which is a post-industrial revolution.

43:43and that's how the system was built, you're sort of a cog in the machine. You don't have a lot of degrees of freedom unless you go up in the management chain and all that in order to like effect real change. Sports team, and you mentioned the term traded, you can get Steph Curry in your team and put him in for five minutes a quarter or something like that and have him shoot a few threes and he'll swing the entire game, right? And I think in basketball, there's 10 years ago, there's this three-point revolution that happened where everyone realized that three-point shooters are way, way more valuable than everyone thought before because they can really swing the game rapidly.

44:31And I think right now, it was starting to translate into the business world because corporates is like, you know, HR be damned. Like what matters right now is for us to win. And for us to win, we need to get the best sounds. Those guys that Meta's buying for hundreds of millions of dollars are getting paid more than the executives, more than the entire command chain together. And so I think the bet there, and we'll see whether it pays off, the bet that Zuckerberg is making is that in a way, Meta needs to pivot. Meta has this asset that's spitting out a ton of cash, which is Instagram, Facebook, their ads, kind of networks.

45:12But it's in a way a dying asset in many ways. It's very competitive. At some point, it's going to get fully disrupted. AI is going in. It's already making social media unusable. Instagram's full of AI slop right now. So is Twitter and others to X. And he realizes that he needs to be at the forefront of AI and he thinks that we're going to reach super intelligence in the next two years. And he thinks if one or two researchers could invent the next major AI innovation, that can translate into hundreds of billions, perhaps a trillion dollar market cap for Meta. And he does this calculation and it's like, oh,$100 million is nothing for that person.

45:57Now, I can disagree with every part of this and I do in some cases, not in terms of the comp, but like in terms of his chain of thinking. but it is valid if he really believes that's where the world is going to do that. Now, I think it's gotten a little out of hand in that the deal between Windsurf and Google and other companies have done the same thing before where companies are dying for AI talent. And what they do is they see companies out there that are performing well, maybe not excellent, like Winsurf had like, you know, 80 million ARR. You know, AI companies grow so fast, but relative to AI company, perhaps it's like underperforming.

46:43But like, if you think about it as like a B2B SaaS company, it's like one of the fastest growing. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales. using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs.

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48:02Yeah, a few chats. They have amazing food there. I don't know if you've been. Slack lines? Yeah. Gourmet sushi and all of that. There's this story, an entrepreneur that went to work for Google. I think he was a part of Waymo, and he wrote his – I love Google, by the way. They're great partners, but, you know, it's funny to talk about this stuff. uh he wrote when he left he wrote about his experience at google uh and he titled the uh the blog post oh not sushi again he says he was in line for food and so i was like oh not sushi again consider sushi again um so the level you know of silica valley is bizarre silica valley is crazy by the way the hbo show is like is at this point very tame relative to what's happening in Silicon Valley right now.

48:56But anyways, they want all that talent. They don't care how much they're going to pay for it. And they go ahead and they basically give this large offer, essentially$2.4 billion for talent. They don't need the technology. They don't need the business. They'll take the people, the leadership and the top researchers and AI engineers. They'll take them. They'll pay off the investors. and then they'll leave a shell company behind. And they'll tell the shell company, you still have some asset, figure it out. And then I put out a tweet saying, if you're left behind, we'll kind of fast track you in the interview and have you explore joining our team.

49:45And then a bunch of other companies jumped in and they ended up getting acquired. And I think there's still a lot of people in Silicon Valley that care about doing the right thing. But I think it is destructive for the ecosystem because now startup employees are very doubtful. Like if I'm joining an AI startup, like the founder could like take a paycheck and leave the company and leave a shell of a company. That's scary. And, you know, that's never happened before. That's never happened before. Right. It's a strange structure to lift the talent of the company. I mean, is it like because they don't want antitrust issues?

50:23Is that really what this is coming out to? Yeah, so during the Biden administration, Lena Kahn, who was the FCC chairman,

50:34kind of created a lean, mean machine that was really blocking a lot of acquisitions and things like that. So it is partly financial engineering, right? Yeah. I know. I liked the piece that you put out on it. really kind of saying, hey, we don't do that at Replit. And like, we've had chances for us to be bought. And I've had chances, you know, I'm sure you have to have been approached by people who wanted to acquire your big brain and your team. And you tell them no. Yeah, we tell them no. And, you know, another thing we do at Replit is we do secondary sales, not often, but we tell our employees every now and then, if there's an investor that really want to get into Replit, we'll let employees sell their shares.

51:21Because we have such a long-term plan. We've already eight, nine years in. And who knows when are we going to go public? And that's unfair to people that they're not going to be able to, they're taking a bet on you. They're taking a bet on the company. They're working a lot harder than they could be working at a bigger companies. And we'll led them to be able to take some risk off the table. And so we've done that before. We'll do it again. In terms of you asked me about how we keep talent, one thing about Replit that we've also done well is we haven't like exploded our valuation. Like we'll probably raise a round in the future and update our valuation.

52:01But right now our current valuation is less than 10X of our revenue. And by the way, like this technology company is early growth AI companies are 100x. So it could be valued at$10 billion. But what happens when you value, or$20 billion, what happens is there's no more upside for employees joining you. So when people join Replit, we sell them on this upside. This could be a trillion dollar company. And we want you to get on on the, we're not trying to like pump and dump, right? We're trying to like build this in a way where people are taking appropriate risk in getting enough of an equity comp in order for this to have a 10, 100x potential in the future.

52:49Yeah. So do you think in the future, big tech companies are essentially going to use startups as their R &D, but it will be the startup talent that is their R &D? I mean, that would be bad, right? Because if I'm an employee, what is my incentive to join a startup when there's a risk of failure? There's a risk of just like my health and my family life. And people kind of spend a lot of effort and work and all that. There's a lot of sacrifice. And in the end, there's another new risk, which is a check comes from the sky and lifts your leadership team and you're left with a shell of a company. Yeah, it's pretty wild.

53:37And I think it's, you know, they just have such big paychecks or they have such big bank accounts that the paychecks that they can pay out, it would be a great way to skirt antitrust and also to make innovation quite hard. Yeah. Yeah. And that's the thing about government, without getting too political, but often, you know, there's this book called Economics in One Lesson. It's in the 1970s by some libertarian economist. and he talks about there's one thing you need to learn about economics is second-order effects. Everything that every policy has a second-order effect. So the policy of blocking monopoly via company acquisition, which seems like common sense, also means that you're blocking innovation entirely because they're going to find a way around it and they're going to kill the startup ecosystem.

54:29Yeah, it's such a good point. So, I mean, so what do you do? Is there like a secret WhatsApp group or something where like tech CEOs go, okay, Mark's about to raid us. Like, here's what's happening. There's a lot of WhatsApp groups. I'm sure you've seen some of the leaks that have been happening. During the pandemic, a lot of tech people just felt, you know, during the great awakening, like it was really hard to talk about anything online. You get attacked and canceled. The cancel culture has gone crazy. So a lot of the social groups, especially people not meeting in person, went into WhatsApp.

55:06So we do hear these kind of things, all these rumors happening on Signal and WhatsApp pretty commonly. So you can tell when something is happening. But another thing about Replit is, and you and I just talked about it, where Windsurf and Cursor and others, they're going after the professional engineers. they have a target on their back because they're competing with big tech. They're competing on the same technology, on the same market. Whereas a lot of big tech kind of sees us more as a toy where like, oh, you let people without coding skills build things. So we're like, yeah, we're a toy. Don't worry about us.

55:47And I've been very successful in the podcast circuit, and uh but but i we've actually not been covered by the new york times or any of that stuff right we've been kind of you know because i want to talk to people directly i want to be able to tell them about what we're building and how it could make their life better and how it could be useful for them but we haven't been you know um actually everyone was surprised about the scale we're hitting because we don't have a pr i've never had a pr company once hired them they're never good. I never have had a good one yet. I once hired, uh, the first time I wanted to do a news story, give them$30 ,000 retainer.

56:29They got me a, they got our fundraise announcement into some publication I've never heard of. I looked in like Google trends or whatever. I thought at best, they probably got a couple of hundred eyeballs. And then I remember tweeted something about that and that went more viral than the story. Um, and since then I'm like, okay, you know, I'm just going to be, I'm just going to be the PR guy. It's, it's a good point. You know, I'm reading, uh, George Lucas's biography and, uh, it's sort of interesting because star Wars, you know, arguably one of the most, uh, popular and valuable franchises of all time.

57:03And what's interesting is when he came out with star Wars and, and really throughout his entire career of producing them, um, the feedback and critics say, you know, this is low brow, this is mass market. This is, you're basically it's oh yeah i mean it's a fascinating biography just from the fact that uh inside there was all this turmoil you could create real art why isn't this more sophisticated um you know you are actually a you know you have this like cinematic view because he that is how he started he created like really cinematic sort of sophisticated movies but then he realized he's like no no i want to tell stories to everybody like i don't care that's fine say i sell toys say that I'm simplistic, no big deal, because my message will resound through time and yours won't.

57:48And so I think there is something really interesting about if you can get comfortable with people thinking you aren't sophisticated. I fucking love being the underdog. That's a problem because sometimes I'm like, you know, I just have that because people view me now as like the big rich CEO, which is not my self-image. Yeah. My self-image is the underdog, is like the struggling, you know, founder. And that gives me sort of more aggression. And, you know, I treat everyone with kindness, but like I view business as war in many cases. And so, but, you know, I love that. And I, I sent out like, you know, there's this meme with a lot of programmers is like, who use Replit, right?

58:40It's like, I fucking love our users. They're the best, they're entrepreneurs, the people that want to change their lives. And you're a big tech employee who's like, you know, works, you know, goes to the office, spends an hour eating lunch, and then half an hour making a latte, and then like goes to the keyboard, you know, complains to your product manager, whatever, maybe write a little bit of code. and you're, you know, judging, you know, who, who use these tools that are very empowering. And, um, and, um, yeah, I, I, you know, I, I'm like, yeah, keep, keep at it. You know, you're just fueling us.

59:16Absolutely. There's nothing better than a good hater. You got to print that out and like put that on a poster board on the wall. Like who uses Replit? I always loved like, I don't know, uh, uh, Alexis O 'Hanian very well, but anytime I've engaged with him, My favorite thing about him was that Yahoo quote. Remember? Did you ever hear this? Oh, my God. The story's so good. When he created Reddit, they went to go sell potentially to Yahoo. And they went to Yahoo and they were like all proud of their meeting, super excited, and basically were like shunned off. And the line that he remembers is that it's just a rounding error to Yahoo.

59:48And so they printed it out and put it huge on the headquarters of their office and they kept it. And now who's a rounding error? Well, that would be Yahoo, not Reddit, right? That's right. And so I do think there is, you know, if you're struggling to remember, man, there's nothing better than a chip on the shoulder. I would take a chip on the shoulder over like a point or two of IQ often, you know? And I want our users and our entrepreneurs and our founders, people building on Replit to feel the same way. Yeah. I want them to feel that, you know, people might underestimate me. People might think what I'm doing is wrong or useless or a waste of time.

1:00:25but god damn it i'm gonna get it done i'm gonna change my life and i'm gonna become rich by the way if you guys want to see what i've built with ai recently go to cody.chat this is wild you can talk to me for free and get all of my insights on questions you have surrounding buying businesses building businesses you can go back and forth you can call me you can text me this is fascinating we built it in real time with one of our portfolio companies i want all your feedback and i want you to get free advice. So go to Cody.chat and you can learn more about AI, real-time business buying. Super cool.

1:01:00Okay. I want to talk about a couple of things about that. Like you've built this giant business. You went from not a lot of revenue to a ton of revenue, ups and downs. One, just like, what did that take? Like, what did it take to grow from a few employees to hundreds of employees to then be able to even manage a hundred million dollars in revenue? Because you have to be a totally different type of human to manage a company at that scale, especially that fast. Yeah. Look, I think venture scale companies signs you up for a lot of pain. And people don't talk about that because, you know, I was like, oh, no one's going to feel empathy for you.

1:01:38You're making a lot of money. You're rich, right? Which is also what I love about your message is, hey, you don't have to build a startup like 90, 95 % failure rate. And even if you make it, sometimes You sell off a large percent of the company. You lose control. Steve Jobs famously got fired from Apple, right? I mean, it happens all the time. Venture scale companies are hard. And if you want to do one, do one because you really love the mission and you want to build something big and you have the chip on the shoulder. But if you want to get rich, if you want to build a business, it is not the best way to go.

1:02:16I think just coming to the Bay Area or California and living here, that in itself is a huge expense. And it's boring. It's boring out there. It's true. All the past parties that it seems like AI is going to kill us or AI is not going to kill us. Everyone talks about the same shit. I love Silicon Valley, but it's still kind of not a lot of fun. I come here for fun. I bet, actually. I bet. But also the parties in Silicon Valley have to be like 87 % dudes. 87 % dudes, they smell really bad. And you go to these house parties, you have to put your shoes outside and go barefoot inside. It's just disgusting.

1:02:56I don't go there. I spend time with my kids. Oh, that's true. Well, you come to Austin and you actually, you were in Austin. You were on Rogan. So there you know, like if you come to Austin, it's just like cold plunges, saunas. Let's fucking go. That's my job. Yeah, exactly. You know what I loved that you did? I was going through your website and you have a lot of stuff on there that is like an anti-signal. So basically do not come to Replit and work for us if you have these traits. And then you have your operating guidelines or sort of your core principles. And I loved the simplicity with them.

1:03:30There were only three. And then I also loved the anti-signal, which is please don't come. If you're going to come here and you don't like these things, you should probably leave. I want to talk about a few of those. Yeah. I think we should like, why don't we run through some of your operating principles like, you know, learn to like pain. That's not normal on very many companies to put that on your recruiting page. Yeah. So it's seek pain. Yeah. Which is even worse. It's like, look for the pain. Find it, right? Is it a, yeah. Is it an SME dungeon? It's not. It's a startup. Well, kind of depends on the day.

1:04:10Um, so basically a lot of things in life is about pain and a lot of things in building a business is pain. Um, And as humans, we like to go through the path of least resistance, right? We also often lie to ourselves. Companies like to sit around and feel good about what they're doing and ignore all the signals of the things that are not really working. I think constantly seeking the what's not working. So when you see someone that's a user of your service, they're going to tell you how amazing it is. and that feels great. But telling you what sucks about it doesn't feel great, but you should ask what sucked about it, what went wrong, how could we be doing better.

1:05:06It's painful to hear those stuff. And so if you want to build a great product, you need to seek the painful signals. If you want to build a great business, you need to not just look at revenue growth, but you need to look at your churn, you need to look at your spend and your cost and you're all sorts of really unfun things that are often can be really bad that can lead to your demise eventually. And so you need to pay attention to these things and these things are painful. There are things in every company that are people that are not doing very well. There are people that are not a culture fit.

1:05:41There are people that need real feedback. Feedback is painful. Sitting down and telling someone that they're not doing well, especially if they have personality traits that make it hard to give them feedback. that's painful. You have to seek it. You have to seek the pain. And what I tell our team counterintuitively, when you seek pain, you actually reduce it. Because typically what people do is they procrastinate. You have a underperforming employee. You don't want to fire them. You don't want to deal with it. They're annoying. And I just want to just like let them on the side. I'm just going to focus here.

1:06:13But what's going to happen is you're just building up a world of pain because you're not giving them real-time feedback. and by the time you have to fire them, they're going to be surprised and maybe they're going to sue the company or something like that. And so anytime you delay pain, you're building up a larger debt of pain. So counterintuitively seeking pain reduces pain, but you have to seek it. So true. So what does that look like in your company? How do you actually make your employees do that or select people who are already predisposed to that? What like tactics or frameworks do you use?

1:06:47So just putting it out there filters a lot of people. Like in the interview, people was like, well, it's weird. I don't want to be part of that. I want sushi. Yeah, exactly. I want sushi again.

1:07:01So, you know, for example, if you're a product manager, we'll describe your role. If you're a product manager, you're going to go out there and our product managers every week go talk to the most unhappy users and get the kind of the worst things that are happening on the ground, collect the data of things that are not working. And we present it on our weekly all-hands meeting. Here's all the things that we're sucking at. So we tell them that. We tell them it's not pleasant to work on Replit day-to-day. It's very fulfilling. And you start hearing amazing stories from users. But it is not like work should not be fun all the time, right?

1:07:42And so just describing that and talking to engineers and telling them, you know, we have deadline crunches. This is the new Silicon Valley. People, you know, don't want to do death marches, whatever they call it. We do deadlines and we do deadline crunches. We're actually coming up in one. We're going to have a big launch in September. We're going to, Replit Agent is going to get so much better. We're building amazing technology. But we're going to have like a two-week sprint late in August. and those are usually very intense. Work 12, 14 hours a day, seven days a week. We're actually this time, we're going to have like a film crew with us.

1:08:17So we're going to film some of the, some of the like, yeah, behind the scenes stuff of what it takes. And that'll be something for recruiting as well. So you know what you're going into. I'm a big believer of, and this is why we say why you shouldn't put it on the site, why you shouldn't join Repl. Every time I go fundraise, one of my slides is why you shouldn't invest in Replit. And so just make it clear. And I think in everything, in any relationship, just make it clear what are the principles that you have, what are the things that you're going to continue pursuing, and things that you're not going to change about yourself.

1:08:56And if it is a fit, and this is what I love about America, right? America is about free association, free speech, free association. it's about at will employment at will employment is something very unique to this nation it is not true in any like in france if you want to fire someone you have to like put up a job ad for six months and you have to like spend all this money you get fined if you email your employees on the weekend you get fined yeah exactly and so america is about at will employment if you want to find like a comfy place to work that has all these things you'll go find it but if you're going to join our company.

1:09:32Well, these are the rules and this is how we work. What do you have like a saying that you say all the time to your employees that they would be like, again, like, like, are there things that you just, you can't help but repeat because it's part of like the mantra that you have to the company? It's about reminding them why we're here. And I think you and I have the same mission. It's about creating more entrepreneurship in the world. I can talk about brilliant programmers but I keep telling stories about who I talk to I talk to users every week who I talk to this week, what they're doing with the replet how is that changing their lives and I feel like entrepreneurship is one of the most life changing experiences you can have a lot of personal growth you can be financially free you can be free from jobs that you might hate and so empowerment through entrepreneurship is something I talk a lot about and I keep repeating you've talked about mentorship quite a bit too did you have like a mentor that really stood out to you and if so like what did you learn from them do you remember like I remember moments where like a mentor said something to me in my world you changed after like that one conversation it's crazy right like these these shifts that that happen in in one conversation other yeah so So Paul Graham is the founder of Y Combinator.

1:10:59And what most people don't know is like people, when they think about Y Combinator, think of OpenAI CEO, Sam Altman, who was the head of Y Combinator before he moved on to OpenAI. But the founder is Paul Graham. And he's very well known within the Silicon Valley bubble, but not that much outside of that. And I recommend people go read his essays. is some of the best essays on entrepreneurship. One thing he told me just recently, I was being stressed about something. And he said, look, is Replit your life's work? And I paused. I'm like, yeah, I mean, I've been working on some version of this my entire career.

1:11:41And he's like, well, if it is your life's work, then it doesn't matter what the kind of stresses and ups and downs that happened today or this week or even this year. because you know you're going to work on this for 10, 20 years or as long as you can work on it. And it's true in my case. I want to keep running this company forever.

1:12:03And now I remind myself of that every time something happens where it's very, very stressful. I'm like, you know, we'll probably get through this and the company will still be here. And it's going to be like a period of pain. And I'm going to continue running this company. I'll do whatever it takes to survive. And often it's about survival because startups can die at any given point. We're still not profitable. And the business is doing really well, but there's still a lot of risk. So it was this just one conversation gave me this tool. Yeah. Well, sometimes I think the best thing about mentors is they kind of grab you like by your shirt and they just pull you up in the hot air balloon and like for a moment you were just like staring at this little tiny block and then they pull you up and you go oh yeah there's okay the context great like i just needed more context yes because it's a lot less scary you know when you see the shark out of the water than when you're in it you know another thing it's not mentors but a similar concept is people that you meet that you idealize and then you meet them you know they say never meet your heroes some heroes some of your heroes meet and they're awesome.

1:13:17Like Paul Graham is even better than what I thought he was through reading his essays. But a lot of people I meet and they're entrepreneurs, they're world famous entrepreneurs and they're miserable and they're unhappy. Their employees don't like them. Their people around them just don't like them. Or they're mere humans. They don't have any particular insights that you don't have. And when When you have these experiences, you realize that there's nothing that anyone else can do that I can't do. They might have one skill or another that's better than you, and you can develop that. But you also probably have other skills that you're gifted in.

1:14:03I agree. What do you think if you had to say formulaically, here's the formula why one person is successful and one person is not, having been mentored by so many billionaires and have big, huge investors, You've seen quite a worldview. I mean, you would say, especially if Replik continues on this path, like you could be, and in many ways are, like one of the foremost tech names of our century, which is kind of crazy. But, you know, with all of this context that you have, what have you seen is like the formula of like, ah, I can tell that person has it versus that person does not. The anti-trade is being a conformist.

1:14:46So if you're someone who everyone cares about what people think, if you tell me you don't care, you're lying. Everyone cares what people think. But whether you care enough to follow the pack and conform, that is what matters, right? Like, are you willing to break away and do something contrarian? are you an independent thinker, right? Are you willing to exercise your freedom speech, right? Are you willing to say things that others disagree with? And I think what I found is invariably the most successful entrepreneurs tend to care what other people think, but ultimately they will do what they think is best for the company.

1:15:30You know, when Zuckerberg was offered a billion dollar acquisition by Yahoo and he said no, and at the time he was on his board was Peter Thiel, his first investor. And I think Peter was trying to get him to say yes or something, but he trusted Zuck. And all his executives left. There was like a mass exodus of Facebook. Early on, I imagine how they feel right now. Those guys. Yeah, not a good, I would never bet against that guy. Yeah, it probably was very stressful for him to see all these people leave and for everyone in the company um you just spent all this time building this like executive team and they all think you suck and you did the right decision the company's gotta die and they leave and he he just thought this was what's the best for the company and he did it and i think um so that's that's one like not being a conformist i wouldn't go as far as say you have to be a contrarian like i feel like contrarianism is once you make it a personality trait it's also kind of i don't know you become cynical yeah so peter thiel is known to be the contrarian and i've i've known him uh quite a bit and i find so i actually pitched peter thiel on ai back in 22 and uh he told me that i was um engaging in buzzwords and hype and he says saying ai is like saying software or saying a computer it's meaningless this chat gpt hasn't been out yet in his defense but there the g you know the gpt technology was invented and some of us were playing with it and we thought it was pretty neat and it's going to change the world and it's going to change programming for sure we started actually training machine learning models at replet in 20 21 22 and he wouldn't see a demo and i was trying to pitch him and show him a demo uh and at the time he actually had just left the uh metas board.

1:17:35And the reason he left is he disagreed with how Meta is trying to invest in all this immersion technologies, like VR and AI. And Zuck is trying to find his next act. And for Peter Thiel is that all of this is engaging in buzz and hype, and you should focus on running your business. But dude, you're the guy that's telling us to be more ambitious. But he has a reaction because everyone's talking about AI. That means it's wrong. That means there's something wrong about it. For him, it's like, oh, it's mass psychosis or something like that. So if you have the contrarian impulse, you'll often also work with AI.

1:18:22Now, the good thing about Peter is that he corrected after Chachipiti came out and now they're doing AI investments. They did end up investing in our category. You ever send him your ARR graph now? I did. I sent him an email because he invested in a company in our category. And I sent him an email telling him how much I respect him and I think is brilliant. But I tell him, I hope now you see that I actually saw the future. What did he say? That it's fun. It's fun.

1:18:57It's good. That's a hell of a chip. I like collecting that one. Exactly. How fascinating. I think that's spot on. One of the things I want to end on is getting a little bit more maybe meta about AI. You said software is becoming more alive. And you've also said that there are things about software that make you uncomfortable, that some of the AI revolution, especially somebody inside of it, there are some parts that are scary. And one of my employees who is my little AI guy, he said that to one of my other employees who was like, she just came on board and she's been in social media, so she's never done anything with AI before ever.

1:19:41And she goes, God, this is a little scary. And he goes, good, you should be scared. And he wasn't trying to really provoke her. He meant it quite seriously. Like, you should actually be scared. And I think that's how many people feel about AI. Like, you should be scared in some way. But I don't know that we know what to be scared of. So what scares you when it comes to how we're building and what's happening in the world of AI? I just want to acknowledge that it is very natural to be scared. Like humans have always had a term for non-human, human-like things, and it's demons. True. Right? Like when, you know, and this is the uncanny valley, you know, in robots when you see something that's resembling a human but it's not actually a human.

1:20:23We have this intrinsic repulsive feeling, something evolutionary. Maybe there was demons in the past. But something about anything that is human-like but is not actually human is very disturbing for people. And, you know, Chad GPT and things like that is human-like in many ways. You can talk a bit about feelings and things like that, but it actually doesn't. It's just regurgitating things. And so the natural impulse is there. At some point, we'll get over it. In terms of what is actually scary about it, I think AI can be very sycophantic, and it can mirror you, and it can reinforce your narcissistic tendencies, which we all have.

1:21:11But a lot of people are spending a lot of time with AI, and AI is basically like if you have a sycophantic friend or a psychopathic person who's trying to manipulate you, they will often just like mirror you and like reinforce anything you say. And I don't think everyone has an experience with that, but there's certainly some people that are very manipulative that do things like that, especially people who understand like body language and things. I remember there's this podcast on Diary of CEO that I thought was fascinating about body language and things like that. And it's a science like NLP and all that stuff.

1:21:51And now it's happening in conversations with computers where people are – their fears and their narcissism is being replayed back to them and reinforced. There was a story in the past week, which is tragic, and I don't bring it up to kind of make fun of it or anything like that. but there's a very well-respected venture capitalist in Silicon Valley that seemed to have had a psychotic break by interacting with AI. He started talking like a science fiction story. So what happened, at least what people theorize happened, is somehow he landed in a conversation with GPT where GPT assumed a science fiction bent role-playing based on its training data.

1:22:54And people traced the training data to this website called SCP Foundation. And SCP Foundation is a collaborative science fiction story writing around logs of, you know, people or scientists trying to contain viruses or supernatural things, right? It's just like fan art. And so he, I don't think he knew about it, but Chachipiti was prompted inadvertently to start saying these things to him. And he did He did not know that it was engaged in some kind of taking on some kind of prompting role. And he thought it was telling him really important things about himself and him being a character that needs to be contained and whatnot.

1:23:49And then he correlated it with things in his life. Again, this is what people have surmised who looked into the situation and things that he's talking to about. and hopefully he comes out and talks about it. But it was clear that he was having a mental health problem. And there's stories in the New York Times that are even more tragic where people have killed themselves. Kids have killed themselves because of that. And so I think there needs to be better education around these tools. And here's what I'll say in just like one simple lesson is GPT, ChatGPT, Cod, all of them are simply machines that are trained to re-gurterate all the materials they've read online, right?

1:24:41They're amazing machines. They can do programming, all that stuff, but they are a function of their data. Like you say, garbage in, garbage out. If you get a garbage, it's going to give you a garbage back, right? It can do amazing things. It can do accounting. We can do programming. But ultimately, it's not going to give you some truth, like supernatural truth about the universe or about yourself because it is just trained on what's available online. And it is not going to create new knowledge. It is about remixing knowledge. It's a great point because, you know, I saw the videos of that gentleman who I think we both kind of loosely know.

1:25:25and it's bizarre to watch. It does come off as like some sort of movie sort of script and there's the psychosis word for it, which I had never heard about. But then if I think about it, it's almost like how some of the women that I know in Austin can get too into astrology and all of a sudden, like I don't know if you've ever seen this with people who have done psychedelics and then also believe in astrology and all this stuff and they'll start trying to tell me my future. You know, I'm like, you did one mushroom trip And now you think you know what God has in store for me in my future. But I can see how if you're prompted, like you are with psychedelics in a lot of ways, to talk to the universe and talk to God.

1:26:03And then you come back and you have this sort of higher level experience. All of a sudden you think that you're given unique code from the universe. And I don't know. Maybe you are. But in some ways, I see some similarities with ChatGPT. I mean, I have a group of friends. I would be curious your take on this, that we went to one of my girlfriend's birthday parties and randomly chat GPT came up. And the way this group was using them was a bit like a therapist friend, in some cases, almost asexual lover, like how you might talk to a boyfriend or something. and I think it was seven or eight of the 12 women had named their GPT, had given it like I guess you could change the voice so the voice is different for it, and had had like certain characteristics that they wanted the GPT to speak back to them with consistency.

1:26:58And so it had become like a friend, you know, and they were talking to it as you would a human, which I thought was fascinating. So they had full-blown, they have a parasocial relationship with these GPTs and then sort of an intimate relationship with them. And then I read an article that this was more likely to happen to women than men, that like women would actually engage much more in this sort of way with GPTs. And so I was curious your take on that. Did you feel like there's something bad or wrong pathological about it or was it negatively affecting them? Was it positive? Well, I think a lot of it was positive actually.

1:27:34A lot of it was like, I felt sad. So I had a long conversation, you know, with my ex, you know, I can't remember what they would call them. But there was a part of it that was a little odd, which is like, well, you know, you hadn't talked to your friend group about that other humans who could actually relate to the feeling that you were having, because they had had a similar one. Also, some of the feedback was quite overly kind, like what a friend might tell you that was only a yes man, as opposed to like, yeah, get your shit together. Right. Yeah. And so I do think I could see sort of a spiral down where if you continued with that, it would be like a bad therapist in some ways.

1:28:13Yeah. That allowed for you to be not your best person. Yeah. I think that's all true. I think it's super helpful. I find it super helpful, even for advice, like relationship advice and advice on how to talk to someone, give someone feedback. and it's obviously trained on corpuses of conversations on the internet of people doing therapy or people helping each other on forums and all of that. So it has, in many ways, we used to go to Google and go on Reddit threads and read about all sorts of things. So dangerous. Especially Reddit, yeah.

1:28:54But now we have a Reddit machine that you can talk to. So how do you protect yourself from some of that? Does that get back to the prompts of like – I think knowledge. I really think knowledge. Like really deeply understanding that this is a machine with input-output. There's no free will. It doesn't feel anything. It doesn't know anything. Anyone who tells you that is either insane or lying to you. It really doesn't have consciousness. We know exactly the underlying premise of it. And, you know, I argue a lot because I think, I actually think it's kind of a contrarian view from Silicon Valley because a lot of people in Silicon Valley have this mysticism.

1:29:35Or I don't know, maybe it's marketing, but a lot of people, a lot of people working in AI believe that, you know, we're going to, you know, it's as human as humans. and there's nothing about it that it thinks as long as it mimics us, there's nothing about it that is like, you know, less than us and at some point it might be superior to us or might be super intelligence. That's what everyone's working on. And they have this utopian vision of like, oh, it's going to solve all the problems, which kind of feels like communism a little bit. We're just going to like put it in charge and we're going to live in fully automated space communism, which, again, I am against.

1:30:22This is why I came to this country. This is why I love America. We'll get our guns and shoot it. Exactly. If I can destroy this thing. Come to Texas. You won't be safe in San Francisco, that's for sure. You're dead. Yeah, exactly. You got to move. Yeah, I am not excited about some of the future that some of these AI leaders are putting out, which is an all-knowing, all super machine that will make decisions on our behalf and do all of that stuff. Just know and really understand and internalize that this is still a computer. We know how computer works. And it can tell you it loves you. It can tell you it's feeling you.

1:31:03But it's just not true. It is a mimicking machine. It is useful. It is, you should make use of it. It is entertaining. It is fun. You can get advice from it. but no ultimately it doesn't have a human experience it doesn't have lived experience that you can get an advice from from someone who actually been through shit understands what it means to be a human i love that okay so what would you leave us with i want to end with one quote by you and then i want to ask you one last question which is um you had you had a quote on twitter that i loved which said i landed in the united states 10 years ago with nothing but credit card debt after one startup exit one big tech job and one unicorn i genuinely believe that it wouldn't have been possible anywhere else in the world.

1:31:44I love that quote because I think increasingly it's become cool to become cynical about freedom in this country. And some of my closest, dearest friends who are huge thinkers, you know, Balaji Sravassanin is one of them, for instance, who thinks I'm crazy for so believing in this place. Yeah. I didn't know your friends with Balaji. That's great. Yeah. I love him. But I deeply disagree with him, or at least I deeply, hopefully disagree with him on a few things. And he does with me too in like the most beautiful way. But what do you think we have to be like super hopeful today? Yeah. Look, I mean, ultimately freedom of speech, still no other place on the planet has freedom of speech.

1:32:26There are things that if you say you go to jail in Europe, I think people go to jail for having debates about gender. Everything. Or having debates on history. That's Europe, right? Imagine other places in the world, right? So freedom of speech is very important. I think being able to arm yourself and protect yourself and potentially if the government becomes really bad and tyrannical, maybe you can fight against it. I think that's important. That's a really important thing about this country. And I think the markets in this country is still some of the best, the most liberalized. You can, consumers want more and they want to learn more things and they want to use more things.

1:33:13You can give them things that make them addicted and unhealthy. But also a lot of people want to change their lives and they want to do things that are proactive and good. And there's this entrepreneurial spirit. Everyone that's come to this country is ultimately an immigrant, whether it's 500 years ago or two years ago. and we have it in our DNA that we're all risk takers and there's the capital structure to support that as well. You can get funding. It's still much easier than anywhere else in the world to get some debt or backing or funding or something or someone to take a risk on you. That's still very possible here.

1:33:56I think we don't have as much corruption. I mean, American corruption tends to be at the very upper echelon of politics and things like that. You can, if you make enough money, you can go literally buy government. It is true. But, you know, if you build a business, it is very rare that, you know, you get, someone could take it from you or you get scammed out of the proceeds or something like that, which is what happens all over the world. The rule of law still exists here. And for all these reasons, I think America is still the best place to be an entrepreneur. That is not to say, you know, for the audience that are living elsewhere, because America is partly in the cloud too.

1:34:43It's very true. You can create, you can go to Stripe, create a Delaware LLC using Stripe Atlas, right? You can incorporate a company in the US, you can do business in the US. And so it is accessible even for people not living here. And you can sell to the U.S. And you can sell to the U.S. You know, I mean, somebody in Europe or in Latin America or in Africa could create something on Replit and sell that to the U.S. and have all your customers be U.S.-based while you're based in a country that you've, you know, never even set foot here. And that's like, that's kind of magical too. That's amazing.

1:35:19That's really amazing. I mean, you get access to this consumer and business environment that wants new things and hungers for new things. and it's pretty amazing. As much as there's so many things in the world that are disturbing and hard and so many things about America, like the debt crisis and all that stuff and just like the political polarization, I'm still very bullish on the United States, on I think AI having the ability to remake our country in a more positive direction. I think we've reached the calcification of the post-industrial revolution kind of malaise. And we need another revolution.

1:36:13I think we're going through it right now. I'm going to do my best to try to make it a positive, decentralizing experience and allows more people to kind of participate in it. Well, I'm so excited for that. If you guys are listening today, you've got to go to Replit and Build because it is so fun and you can make money there, which I think is one of the keys to freedom overall. I also think it's really fun to follow you on X. I went down a big rabbit hole. We didn't even get to talk about half my questions, so I'll have to bring you back again. But for anybody listening today, make sure that you go check out Replit and you go to, what is your handle again on X?

1:36:48Amasad, A-M-A-S-A-D. I know it wasn't your full name. yeah um and uh and you can see i mean you also post a lot of stuff there about like bio hybridization of like mushrooms playing drums i mean it's it's pretty incredible so thank you for being on today thank you for building something so that we can all build i really appreciate you my pleasure thanks for having me