This AI Startup Idea Has 500 Million Customers Waiting For It

0:00I mean, how many times have someone proposed something and everyone's like, I don't get it. But then someone else is like, look, what this is really about is blah, blah, blah. Everyone's like, oh, that sounds great. That I want. What you just said, you know, it's not bad information. It's bad presentation. I made my whole career doing that. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. All right, Jason, we're live. This is how we start. We just jump right into it. Can I give my like brag about you intro of what I know about you? way, then you can kind of correct anything that I get wrong.

0:35Of course. We have Jason Cohen. So Jason Cohen originally started, you had a bunch of smaller businesses, but in the early 2000s, you started, was it called, it's just called Smart Bear or Smarter Bear? Just Smart Bear. That was 22 years ago, believe it or not. So 22 years ago, you started Smart Bear. You grew it for like seven years, bootstrapped it, making millions of dollars in profit, sold it. That company now has a thousand plus employees has sold recently or traded recently for like 2 billion. Is that right? Yeah. It actually doesn't have that many employees. It's more like hundreds, which is part of why it's impressive because it's, yeah, it was sold in 2020 for 2 billion and it doesn't have a thousand employees.

1:13It's super profitable. Like it was publicly said then what the profits were, it's 50 % bottom line profit. God. So just, just a, a, a printing, a cash printing machine. Then When you started WP Engine, of which I'm a customer of, WP Engine is one of the largest web hosting companies in the world. That company you bootstrapped for two or three years. Then now you've raised, I think, two or three hundred million dollars. It makes many hundreds of millions of dollars. It's worth billions of dollars. And all along the way, you've been blogging at smartbear.com. I've been reading that for years. You are not the loudest person.

1:49And that's the reason why I wanted to have you on is because you're not the loudest person. But anyone who's in the thick of it and trying to build great companies, everyone reads your blog. The 1%, the 1 % read your blog. You've got a really good audience of people actually building it. And the reason I like you is you and Dharmesh are a little bit of the same personality to me. There's this Venn diagram. And it's people who are wildly successful. We're talking billionaire successful, but then also just do shit just because it's fun. And at the same time, have this weird, logical way of thinking, but then can disregard that logical way of thinking and just do what's cool and what's exciting, which is really rare to have someone who's both an engineer, but also understands like, fuck it, I'm just gonna do it because this is cool.

2:32And you do that. So like, Sean, he just DM'd me on Twitter. And I was like, dude, I just got this automated DM from you. He's like, Oh, yeah, I built this script that automatically DMs everyone who follows me on Twitter. So he's that type of guy where like, he's got like 1000 projects that he will never even talk about. But it's like a little thing that he had to get on the weekend. but you also have WP Engine which is this massive unicorn and so that's why we wanted to have you on the pod. Well yeah, I mean WP Engine's like one of the top 10 web platforms in the world and then you're also tinkering with like these DM, auto DM scripts because you're like, yeah, this is useful, I like this.

3:04And so that's the, that combo we've come to find is a really good fit with us on the pod. Somebody who has ambition and scale but also is a tinkerer at heart. I want to talk to you about some different ideas. So check this out, Sean, on your computer and Jason, if you have a computer, do this too. go to zek.app. So it's the word deck, but with a Z. So Z-E-C-K.app. Okay. So it says, Zek's reimagined how CEOs collaborate with their board. You scroll down. Whose face is that? Yeah. Ed Norton. Ed Norton, the actor, is the founder of this company. That's funny. I believe he's like, if you Google this company, Zek, and you see them doing presentations on CNBC and shit, like that.

3:49He's talking. He's the founder of this company. Dude, I just booked a demo call in 45 minutes just in case it's Ed Norton who's going to... I just might get a free call with Ed Norton. This might be great. If it's not Ed Norton, I'm immediately hanging up the Zoom. I saw an interview with him and he said he's super active. But these guys are... They're like... I guess Ed Norton's father, I think, was a business person. And he was raised around business. And he was... I saw him give this interview and he was like, yeah, the thing about when I work with all these companies I invest in is they're horrible at telling me back the story.

4:18They're horrible at giving a presentation. And so I just, I wanted to create software that would just help them be better at that, at telling the story, explaining how the company's going and to make our meetings more productive and to teach them how to do presentation. And I think this company, I don't know if it's software yet. I think it's still a service. I'm not entirely sure. But I saw this site and I was like, what the fuck is Ed Norton doing on this little software site? But Ed Norton, this is his company doing it. And, you know, it's not just the experience of the viewer and just wanting people's time to not be wasted, which it also is that.

4:52But it's also more compelling. Like if you're trying to propose something, if you do a better job, more likely that it'll happen. I mean, how many times has someone proposed something? Everyone's like, I don't get it. But then someone else is like, look, what this is really about is blah, blah, blah. Everyone's like, oh, that sounds great. That I want. What you just said, you know, like what? I mean, that's just bad presentation. It's not bad information. It's bad presentation. I made my whole career doing that. Well, yeah, we have these college kids come on once a year, twice a year, and they pitch their company.

5:22And Sean's very good at hearing what they said. He goes, that's actually a great idea. You've explained it horribly. Here's how I would retell that. And he will tell this beautiful story. And then everyone's jaw is dropping. And we're like, yeah, we're in. And he does that all the time. He's very good at that. You know, we've done pitch competitions at Capital Factory for 15 or 16 years, and it always goes like that. So can AI magically fix it all? I don't know about that, but could it go from negative 10 to at least a 2 out of 10? You know, maybe. Well, I think you said three, I thought of three interesting things while you were talking.

5:55I think you prompted three really interesting ideas. The first is, you're right that most decks are terrible, and everybody attacks this from a, how do we make the slides fancier? Prezi's like, hey, what if you were hang gliding while you were looking at the slide deck? He's like, no, no, Prezi, just chill out. That's not what we need. And other people pitch is like, you know what? What if a designer just designed everything? It's like, cool, but the actual message is the part that's out of order, jumbled up, unclear. It's foggy, and that's why this deck is no good. Not because the background color needs to be soft pastel pink.

6:27And so you start to look at this. And one thing that I've done is whenever somebody on my team makes a presentation, I inevitably will try to like, try to make it better. And the easiest way to make it better is just to ask a couple of questions, right? Like a couple of simple questions. One is like, if people are going to remember one thing from this presentation, what should it be? What's what is the number one takeaway? Oh, it's this thing on slide 37. Cool. Let's make that slide one. And then that thing you want them to take away, let's make that the title, right? Like that'll be the title of that slide.

6:53And you just sort of go on, you know, you ask like five questions and you can make your presentation much better with five questions. I've also started using AI in this way. So instead of going to AI and basically go to chat GPT, instead of asking a question and getting an answer, which I think is how most people use it, I'll go to chat GPT and I basically say, I'm trying to do X, but I'm not sure where to start. What are some questions, like ask me some questions so that I can start thinking about this the right way. It'd be like, well, it seemed like, you know, we did this when we did an episode where we were picking us, we did a fake like stockapalooza, we're picking a stock.

7:26It's like pick one stock, you know, just like for fun, like we're all horrible stock pickers, but let's do it just for fun. And I went and I wrote that. I said, how should I be thinking about this? Well, if you're picking a stock, what you want to do is this. And you might want to ask yourself the following questions. What's an area I really know about? What's a thing that I really believe in? Am I looking for something short-term or long-term? And it asked me a bunch of questions that made me get more clear. And I think if AI was going to do anything, what it wouldn't do is just take my input and make it better.

7:51It would actually stop me before I even vomit. And it would just say, cool, let's just establish a couple of how long is this supposed to be? Absolutely. Getting interviewed and getting interviewed by it makes a lot of sense, especially if it has some context of what you're saying. And so the questions can be even more pointed. Another thing I've heard once, which I really like, I haven't used this a lot, but it's neat, which is one thing that AI is good at right now is just giving you the bland, neutral summary of the topic. It definitely can do that. So if you ask it for the bland, neutral summary of the topic, it will tell you the most obvious, boring stuff.

8:26So that's what you don't say. That's like a negative space. So like, well, this isn't interesting. Anything that's not this might be interesting. Now, maybe that's on you to think of what that is, but maybe there's some like multi-step process where the AI could be like, Hmm, okay. I heard all their crap. Now I'm going to go ask myself what the, then I'm going to go try to find the stuff that they said that's not in there. Then I'm going to try to enhance that. Then I'm going to try to build like maybe a multi-step AI could do that. Maybe not again, that there's a lot of maybes and could have.

8:54I know, but if it were obvious and easy, it wouldn't be a good startup idea. This has to be something, a good startup idea has to be at least somewhat difficult to pull off. So you have a little running start. Anyway, that's interesting. And then the second thing is you said about titles. That's a huge pet peeve of mine. I agree completely. People will say, they'll use the title to label what is on the page, which is usually not useful because I can see what's on the page. It should be the message you want them to take from that one slide. That should be the title. So it shouldn't say our team.

9:22I can see it's our team because there's three heads and their stuff. Let's just say something like, you know, our team has had three successful exits or our team has a collect, you know, collective 30 years of experience is the most boring thing you could say, but at least it's something like, what is it that you want me to know about the team? That's so special. That's what's in the title. Again, AI could prompt or even force that. And it also then helps your, it goes the other way too. Now it helps your narrative. Oh yeah. So I should put on the screen where we all went to college and stuff.

9:51I shouldn't read that. I should talk about the title, which says we've had two exits. So I should say, yeah, we exited this thing in this space, this thing in that space. And we work together there. We've been through the trenches. That's why this, this team is totally de-risked in terms of people, which you don't see every day. So we have plenty of risks, but the team's not one of them. Whoa, that's a good, that's a good thing to say on a team slide to an investor, the investor's like, okay, tick. Like, I don't quite believe you that there's no risk, but like, I'm with you. I'm with you. This isn't when I'm going to lose sleep over it.

10:18I love that. You know, that should be the title. So like AI could help and that goes both ways and do it. And if you don't have good titles, it could say, what should, what do you really want to say here? Oh, let's make a title this long. Okay. Now let's go back to the text. This is something you could be prompted for. And any presentation is improved. If you do that. Here's what's funny is that, you know, I have no idea if you are, but you might be a billionaire or you're in that realm and you've started multi-billion dollar companies, we asked you about ideas. The idea that you spent most on is on how you manage Twitter.

10:51I find that to be hilarious. Give us the second idea, your Twitter social media management tool idea. Yeah, well, it's not just Twitter. Like part of what's neat about it is the same tool does LinkedIn and Threads and Mastodon, which isn't really working. But okay, here's some stuff I think is special. And also other people could just do this even manually if you want. So one is there are certain people that I want to have more interactions with. So I have them in a Twitter list because then you can search for it, right? But I do a search where it's the people on that list and they've posted in the last 20 minutes, which is a pretty small window.

11:32And there might be a couple of things like they have some favorites or I don't know, whatever. Okay. And I'll look at that and sometimes there's nothing in it. Sometimes just one or two, but I'll try to, if it's relevant to me, then I'll respond somehow. And because it was just, it just got posted. It's much more likely that they will respond or see it. Also, if it's a good comment, like if I spend time making it really good, then their followers who might see this over the course of the next 10 hours, they may see my comment and upvote it. I may be one of those comments near the top that ends up with a lot of likes and maybe some follows.

12:06I've seen times where I have a follow bump because of a reply to someone with a lot of other followers, right? By doing it early, I get that. So if I just scanned everybody, that timeframe is important. So it really focuses my attention on that. So I spend almost no time on this, and yet I have this big outsized impact of what those are, whether I'm talking to that person or the replies. So that's something you can just take. They're like, my system does that, but you can just take that. The other effect that has, which is funny, is people are like, dude, you're always online. Like, I saw Dharmesh posts and like, bam, you were there like in two minutes.

12:42What they don't know is, yeah, but I see like 150th of what Dharmesh posts. It's just whenever it happens to be exactly what he posts, I'll see it. So your perception is, quote unquote, I'm always online. But the fact is, no, it's this trick. And so it's like a really funny trick that has that effect. Why do you care? Why do you care? because you had this one thing. Well, no, I asked that because you wrote this other thing that I totally agree with. So let me say it this way. I have a bunch of buddies that are very successful. You have no idea who they are. They'll see me get popular on Twitter and they go, hey, Sam, can you help me write some tweets?

13:19And I'm like, dude, why? Who gives a shit? You're winning. Who cares about this? He goes, I don't know. It seems fun. So I help them write some stuff and every once in a while, it'll go viral and they get popular, whatever. and they get addicted to it and i'm like dude don't get addicted to this you get addicted to the thing you're already doing that's way better yeah yeah and you have you have this post or it was a sentence somewhere in one of your blog posts where you're like uh i actually think that people who have audiences that then launch software products to those audiences i think that's really dumb because they're actually not going to get that they're not going to get that many customers that doesn't work but that's not why i'm doing it i'm not i'm not launching another product because of social media okay so then why do you care so i mean when i followed you i got an automated DM from you.

13:58You told me that you built something to do that. Why do you care about building something like this for social media? It's strictly for fun. Now, what I have done for even longer than WP Engine is right. And so that is at this point just a part of who I am. And I get a lot of fulfillment out of it. And like you said, you're like, wow, there's a lot of good stuff here. Every time I hear that, it feels good. And also it's really just the craft of it. Like I like to try to get the thoughts that I have as clear as possible or as interesting as possible But there's so much that gets triggered that way.

14:28That's useful to me and fun for me too. And Sam sent me this blog post that you wrote that I loved. And I think it's called Rich vs. King. And this is great because we talk about money and we are honest about the fact that many people get into entrepreneurship because they want to make a bunch of money. And that's okay. You don't have to pretend. You don't have to lie about that part, which I think is common, unfortunately. But you also built bootstrap companies that enabled a great lifestyle for you and your employees. And so I'm curious, can you explain for people who haven't read the Rich vs.

15:00King post, what is the premise of this post and then how it's played out for you? I think the key thing that people really like out of it is this two box problem that I put near the end. That was my final decision of why to sell SmartBear, which is let's say there's two boxes in front of you. And let's say if you are wealthy, try to remember when you weren't. In one box, there's$10 million, like period. That's what's in the box. in the second box, which is opaque, there's either$20 million or nothing. And let's just say it's a 50-50 chance of which one it is. And the question is, which box do you want?

15:38You have to pick just one. Which one do you want? Well, if you don't have money yet, I mean, almost everyone's going to pick the 10 million for sure because it changes your life permanently. Now you could argue, you know, what kind of lifestyle, blah blah blah but like that's a life-changing amount of money whereas the other one is even more money but it's actually not that much more life-changing and there's a good chance that you won't get it at all that's silly this is why when you get offered some money to sell the company it's often a good idea to take it of course it could be big in the future but if you haven't crossed over to this life-changing amount of money yet but i was in that post called the freedom line you could argue how free how much money okay but when you cross over some sort of line which maybe you should decide for yourself.

16:19It's awfully hard not to take it. Now, what's interesting with a box game is if you're a statistician or you're an economist, what you would say is there's no difference between the two boxes because the expected value of both box is 10 million. So they're the same. And my point is, no, they're not. Expected value is not the right way to evaluate the situation. Furthermore, in real life, I said that one box was 50-50. In real life, you don't know what the probabilities are. What's the chance the company will grow and sell and be huge? What's the chance it's stagnant and it doesn't sell? What's the chance that it goes to zero?

16:54Nobody knows. It's worse than that. It's uncertainty, meaning I don't even know what the probabilities are, much less risky, which means I do know what the probabilities are. It's actually far worse. Some people might take the other box. It's okay. You can do whatever you want, obviously, but most people will take that sure thing when it's real money. Now, if it's$10 versus$20, whatever, you might as well take a flyer on 20 because who cares so the magnitudes relative to your net worth also matter which i didn't really talk about there in that post because i wasn't getting into that but that's also true but it is it changing something substantially for you or not is actually a critical question so you're a great writer and there's two or three great sentences that i like out of this post it was uh you very bluntly you say i was always in it for the money especially in the form of an acquisition i would tell everyone here we're here to make money and if someone offers to buy the company someday, I'm going to sell it.

17:45And then you said, after you sold it, you go, I have the freedom to work on any project I want for the rest of my life while simultaneously providing for my family, never again worrying about bills, debt, having a place to sleep, or sending my daughter to any college she wants. And particularly, I was always in it for the money. I think that's just great to just be very clear in knowing exactly what you want in that post. I thought that was beautiful how you said that. Also, it's not incompatible with things like I want our customers to be happy. I want our employees to also make that much money, blah, blah, blah.

18:15Like it's not incompatible with other positive things that you want to do. There's a big difference between I want to make money and do ethical things and create products that actually have value and are not just a middleman or something like that or arbitrage. You can say both. In fact, you probably should. it. So you wrote that post in 09, I think originally, and you have this cool graph where you show like there's like a threshold of that matters. Uh, in 2023, 24, what's that threshold do you think now? And what do you think it was then? Well, what's interesting is, um, it's, this is not relative.

18:51So at this point at WP engine, also we've had a few secondary rounds, which by the way, all employees got to participate in as well. Um, and so now I have enough money that I don't have a line anymore. Like it's okay if I don't make any more money ever again. I really don't care. You know, I don't care. Oh, can I get a jet or not? It's not interesting to me. Just this is personal, right? Everyone's different when it comes to money or what they want lifestyle. I have a lifestyle that I want. I don't need more money. So there's no line. Like I just don't, that's not what's motivating or what will make a decision for me anymore.

19:25Well, what about Jason Cohen in 06 when you sold? like was there what was the number where you're like anything above is gravy oh and that's that's a threshold for me i think then i was thinking uh like 10 million um i think i think nowadays it's it's much more clear that you need something like 20 million this is all in the u.s by the way to have what would be considered to be like a rich lifestyle in america because okay you know people say things like um well i only spend you know 80 to 100k a year right now so if i had 10 million i I could live off of that and you'd be right. But that's not how people are.

20:01I mean, I'm not very materialistic and even I wouldn't want to do that. Oh, I'm going to continue to live at that rate forever. Isn't usually what people want to do. It could be again, if that's you, then that's, that's amazing. That's awesome. Perfect. You know what to do. That's not really what happens. So probably more like 20 million. Cause you have to, you have to, there's a lot of things to do, but you have to think about, um, averages and having a portfolio that's balanced and then taxes and then inflation. And so even 4 % of interest taking out per year is actually kind of a lot given that you want to maintain it and keep up with inflation, et cetera.

20:34And that's where the 20 million sometimes comes from is, is, uh, you know, 4 % of that is like a little under a million after tax. And then you can have quite what you would anyone in America would consider a rich lifestyle. I'm happy that you put a number on it. One thing that I think is cool. Well, we should put this chart up or the graph on our YouTube channel. So basically it's like, there's like the levels. He's like, you can't afford to lose your job. You know, at some point you're at that level where losing your job would be detrimental to you. Okay, then you can own your own house. Then you can, and he wrote, never look at the right side of a menu.

21:07All right, so you only look at the dish, you don't look at the price. Never have to work again. And then it's like private jet. And you can see that like, it's asymptotic. The value of the cash is, you know, definitely flattening out the further you go. And so you draw that line and the freedom line, basically, of like, you never have to work again. You could have total control over your time as like the important threshold. Yeah. But see, so much also depends on things like, I mean, if you're 26 and you get this offer and you know you do want to work, like you don't want to not work again. That's not what you're going to do.

21:38You're going to do something. So it's like, all right, I don't need to never work again, quote unquote. What I would like to, but let's say you're burned out. It's been six or seven years. You just want to do something else. and so well you know you do take a ton of money off the table then you can invest a couple million into your next venture while still keeping a couple million in the bank and so no you couldn't live off that for the rest of your life but you don't want to live off that for your life you want enough to self-fund something and do the next thing and so I mean you have to look at the goals of course that are in front of you but certainly you don't want to adopt other people's goals I mean I think that's maybe the unspoken other message of the post is what is it that you want And how do you know that?

22:17And how do you get that? And if someone else says like, no, you should, you should build a unicorn. Like it doesn't matter what anybody else says. Yeah. Play your game. So, you know, your blog is basically like a, a gold mine of startup wisdom. And I was mining it last night when I was doing my research for this, going back through reading some of the stuff that I liked. And there was a few things I had never read that I actually really, really liked. I wanted to read a couple of these, get you to react to them because you had some like kind of just nuggets, small, short things that I want you to elaborate a little bit on, or maybe give an example about just to make it real for people, because they rang true to me.