'We haven’t made a pitch deck since we started the company': Granola CEO Chris Pedregal

0:02This podcast is brought to you by HSBC Innovation Banking, connecting you with what's next. Hello and welcome to the Sifted podcast, the show where we help you get to know the brightest and boldest people and companies in Europe's startup ecosystem. As always, I'm Amy, Sifted's editor and your host. And today I'm joined by Chris Pedregal, co-founder of AI note-taking app Granola, which last week raised a$43 million Series B at a$250 million valuation just one year after launching. If you're in venture, it's quite likely you're already a Granola user. And if you're not, I'm sure you've heard VCs bang on about how much they like it.

0:41The London-based startup is growing fast, with users growing 10 % week on week, but it's still a tiny 20-ish person team. It's also got plenty of competition from other transcription and note-taking apps like Otter and Sana AI. And I'm sure this isn't an area the big tech companies are overlooking either. So what could the road ahead look like for a company like Granola? and what is life like as the founder of a very hot AI startup. We'll get into that on the podcast today. Hello, Chris. Hi, Amy. Thank you so much for having me. Where are you joining us from today? I'm sitting in the Granola offices where we're based in Shoreditch.

1:18So if you hear any ambulances or background noise, I apologize in advance. So let's start with the elephant in the room. The way it looks to me, Granola has, as I mentioned in the intro, a lot of competition. So how do you plan to break through and become the default note-taking app? Well, I think what's interesting about that is when I think about competition, I actually don't think about meeting notes as being the space we're in. But somehow we managed to do it. Like when we were first pitching Granola to people, they said, you really want to make another AI note-taker? Aren't there already 30 of those?

1:52And something in the way we designed Granola felt different enough that it resonated with people. But when I think about actual competition, it's not about AI nodes. I think where we are headed is really trying to become the future tool for work, like the tool that people use to do all kinds of knowledge work, augmented and supported by AI. And no one really knows what that looks like, right? So I think that it's less about how do you compete with what already exists and more about how do you invent the future, which is a lot more fun. And I've been dutifully testing out Granola, admittedly not for that long yet.

2:30And one of the main differences I've noticed as a consumer is that unlike a lot of the other apps, it doesn't do that really very annoying thing where every time you join a meeting, it pops up and says, insert name of other app would like to join this meeting. Is that a kind of happy accident or was that a very intentional design choice you made? both uh so i think the design choice that we made is we wanted granola to be like from the get-go we think of granola as a tool for thought and that's like a it sounds like a lofty term but it just means it's an open-ended space for you to do thinking the same way a notepad and pencil is a tool for thought i think to be a good tool in that way you have to be super reliable right you like you just pick up a notepad and a pencil you don't have to think about it you just start using it, it always works.

3:23And the way we built Granola is to work in that way. So it doesn't matter if you're on a Zoom call or a Google Meet or a Slack huddle, or if it's literally, you're just in a meeting room with another person and you want to take notes, Granola always works. And the way we built it is that instead of having a bot that joins the call, it just uses the audio in your computer. So that it works in a consistent fashion, no matter what you're doing. But it's very clear that people don't like bots. I think there's something about bots that feel in the uncanny valley, where it's like, I understand what it's doing, but it makes me feel kind of uncomfortable.

3:58I can't control it. If someone else's bot shows up, but the person doesn't show up, am I allowed to kick it out? I think there are a lot of questions that pop up once you have these AI bots. Yeah, makes sense. And on this kind of, I guess, journey to be the kind of tool for thought, where does Granola go next? what does their kind of near-term roadmap look like and what like longer term how does this grow into a much bigger more all-encompassing business and product than it is right now yeah absolutely so i guess for context just for people who haven't used it granola right now looks like apple notes so it's a notepad and it listens and transcribes and then when a meeting ends it'll take whatever notes that you've written and flushes them up to be really good but it really feels like apple notes like one meeting at a time and um what is interesting i think you know People don't realize this when they start using Granola because they'll just start using it for a meeting because the notes are useful.

4:50And then at some point, they'll step back and realize, oh, I actually have all these meetings in Granola now and I have the full transcripts in there. And because there's a ChatGPT-style feature in Granola where you can chat with all your meetings and people's usage starts to change. A couple of weeks after they start using Granola, they start going back to it more and more to ask questions. It's like, oh, what did Amy say in that meeting? What did we decide? And I think there's like this hierarchy of questions. Like the first level question is, what did this person say in this meeting? And then eventually it starts going up to being like, hmm, how could I be doing better in my interviews?

5:29Right. Like what kind of questions are they not asking? Or given everything you know that's going on, what should I be focusing on this week? Like those types of questions. And I think the vision is very clear. I think if we build Grinola the way I hope we do over the next year, if you're a knowledge worker, you should be doing most of your work in Grinola. Let's say 80 % of your work in Grinola. And that could be in meetings. That could also be when you're not in meetings and you need to write a strategy memo. A lot of you mentioned VCs. The classic thing I want VCs to do is write their investment memos.

6:06Right now, they use Granola for all the interviews, both with the actual, let's say, the company's pitching. So with the founders, but then they'll do the reference calls. Then they'll have the internal meetings where they're discussing the deal. Then they'll go speak to some experts and they'll do all those things and have all that context in Granola. And if you could then just upload a few documents and a few websites to that, it'd be the perfect place to work with AI to generate a deal, for example. And what is Granola not very good at at the moment that you would like it to be? Or maybe another way of framing that question is what are, say, those VC users, what are they asking for that you're not doing yet?

6:42There are a bunch of things that we're not good at intentionally. It doesn't apply to the VC, so I'll get to that in a second. Journalists, for example, ask us to, it'd be really helpful to be able to listen to the audio of the meeting, for example. I'm sure right now this is being recorded and we can go back and look at it we intentionally don't do that because we want we want granola to be the least invasive possible whilst it being as useful as possible and we find that most of the time uh having the transcripts more than enough right and having an audio recording actually feels like a much heavier much more invasive thing so we decide not to do that um even though it'd be super useful to a certain subset of our users for the vc use case, I think a lot of what we don't do right now is we really only let you have meetings in Granola.

7:33And we get a lot of requests to like, please let me upload a pitch deck. Please let me upload research we've done on competitors. Please let me add other sources of context to Granola because that's what I need the AI to be aware of to be really helpful. So I'd say that's probably the main um the main tripping point also the way we do audio means we're less good we're not great at identifying different speakers yet uh which is something we're working on we're going to get better at um but it's one of the trade-offs of the uh the technical approach we took and that uploading other documents is that something you plan to do or not for a reason absolutely my view is ai is only as helpful um as like how much it knows about you so it's like the ai that knows you best is going to be the AI that is the most helpful.

8:22And so I didn't realize this, but there's just a tremendous amount of nuance and information in our conversations. So the transcripts we have in Granola, they say a lot about you and you have a really good picture of what's going on in your work life. So we just, they're just parts of that picture that are missing, right? Things that are happening in your email or in Slack or in documents. And if you add those into Granola, then we'll have a really fantastic picture. and hopefully be able to be much more helpful as a result. So what if I'm not Amy, a journalist, I'm Amy, a manager at a startup, which I also am.

8:59What in a year's time, if Granola has maybe access to all the meetings that I've been in, and perhaps in future my emails or my Slack, what kind of feedback might it be able to give me? Or how do you imagine me using that to become a better leader or a better, yeah. mentor or more efficient with my time it's a great question uh i i think it'll it a lot of it it's always driven by the individual right so granola is not going to come in and tell you how to do your job or or what kind of person you should be so it comes down to what are you trying to change about yourself i think it the types of things fall into a few buckets at least with my personal usage because we have a lot of this that we built for ourselves internally that we're testing.

9:46I find granola most useful as a thought partner, for example. So there's a role that I need to hire for, and I've never hired for this role before. I need to get smart at that. So my process there is probably, let me talk to a few people who've had to hire for this role before and get their advice. And let me talk to a few people who aren't looking for a new job, who are in this role and get their feedback there. Let me talk to a few candidates. And then going to granola and being like, help me write the job description or help me write the criteria I'm going to use to assess new candidates and then have it back and forth and being like, well, how has my thinking changed from the beginning?

10:26And what am I not thinking about? Do I really want this? Like that type of back and forth feels super valuable. I know other Grimlo users do things such as they'll put all their one-on-ones in a folder and then they'll have, they'll ask Grimlo to give them feedback in terms of how to be a better manager, what should they be focusing on. questions we should be asking. So I think it really is, it is an open-ended question. It's hard to predict. I think two years ago, it would have been really hard to predict how people use ChatGPT. And I think once the work context becomes accessible with something like Granola or other tools, you'll see user behavior change and it's hard to know exactly what they're doing.

11:04Really interesting. And why is it, do you think, that you've gotten so popular so quickly with VCs. What's behind that success? Is it simply word of mouth or is there anything else that's happened there that, I don't know, is a kind of useful learning or you can replicate across other user types? Yeah, they were just the first user type that we chose to focus on. So Sam and I, my cover and I, we were building the first version of Granola. We always envisioned it as a horizontal tool that could be used by any knowledge worker. and we said we should just choose one type of user to focus on to make it really good for them can expand out and vcs are great because they'll answer your emails and they'll willingly give you feedback on a product so we said okay let's let's do vcs that seems like a and they also have a lot of meetings and a lot of very like formulaic style notes like a lot of you know if you're doing five pitches a day you kind of want your notes to be in a consistent format so they were relatively easy user tech to build a good experience for.

12:06Now, we're much more focused on founders because they have lots of different types of meetings that might be indicative of the different folks that work in a company. So it's like they might have a sales call, they might have a user call, they might have an internal standout. And doing well across all those different meeting types is harder, but it's what we're currently focused on. And this, Grenoley, isn't your first company. You previously started Socratic, an AI tutoring app, which you sold to Google after five years. Is the end goal for Granola an exit to a big tech company as well? No, my hope is to be working on Granola for as long as I possibly can.

12:48I think we're in a very unique moment in history right now with this transformative technology, which are large language models, the technology behind the latest wave of AI. and I think all the tools we're going to use for work are going to be reinvented in this time so I think we're very excited to do that I don't have any desire to sell to a big tech company I'm also a pragmatist there are many worse outcomes for a startup than to sell to a big tech company but I think everyone on the team here kind of believes that this is a special moment special opportunity we'd like to see how far we can take it if you were to gaze into your crystal ball how do you think it is going to pan out do you think it's the the in terms of this sort of reinvention of the way we work and the tools we use to do our work do you think that those existing big tech companies will sort of win in the end is is everything is a granola or a mistral or a you name it eventually most likely to be integrated into those businesses or do you think we could see a whole new big tech company come out from one of these right now much smaller use cases that kind of grows to envelop a whole bunch of other things i have no crystal ball i but my views on this are whenever there is a transformative technology change um ones we can think about and I guess in my lifetime are the mobile phone or when software moved from being apps that run on your computer to the web.

14:22I think people generally, we generally underestimate how important it is for products to be native to that new medium. So an example of this might be like Microsoft Word had dominance and it's still very popular but when when things started moving to the browser and moving to the web google docs came around and google now a lot of people use google docs and that wouldn't have been possible i believe if there hadn't been a technological shift like that and you could say oh but didn't microsoft had every advantage there they they saw the web coming they had all the engineers they had all the users like why was it google able to do that and i think it is because when you're building something for a new medium, it's different and it's easy to underestimate how different that is and how perhaps the primitives in your product need to be different.

15:16On a long enough time horizon, the tech, the large tech companies tend to, tend to catch up. But I think every time this happens, you'll see a new, a new really big tech company kind of come up with that technical shift. So, so we'll see. I think, I guess what I, what I really care about is that we invent better tools for people to think and to do work. And ideally, the best ideas will disseminate to as many people as possible. And hopefully, we have a hand in that. This podcast is brought to you by HSBC Innovation Banking. As the bank for the innovation economy, HSBC Innovation Banking understands the unique challenges of the startup journey, as well as what you need to meet those big milestones and get you to the next stage.

15:58With a relationship management team who knows your sector at your side, international connections at your fingertips and a wealth of tools at your disposal. HSBC Innovation Banking is here to help power your growth and connect you with what's next. To find out more, head to hsbcinnovationbanking.com. What mistakes did you make on that first startup journey that you won't be repeating this time? Socratic was, my last company Socratic was an AI tutor for high school kids um and it took us five years but we ended up building a product that was extremely popular with high school kids that we were answering four billion questions a year the last time i checked um probably high school kids don't have a lot of money that they want to spend on anything but let alone homework help so i kind of and i'm not saying you can build a big company in education it's just the incentives sometimes don't feel very aligned between providing value to people and how willing they are to pay.

16:59And I just wanted my next company to be the space where it's like, oh, if this tool is clearly very useful, whoever the buyer is in our case as companies would be very comfortable paying because they'd see the benefits. I have to say, though, that the building Socratic in the late 2010s versus building Granola now, it's a very, very, very different environment. So I think a lot of the instincts I had from my first company don't apply to this one or trying to unlearn some of them what's an example of that speed of change the world is the world is changing at an unbelievable unbelievable pace and at least generative ai and um which means it's just an all-out sprint for startups you might have you might be ahead one day and if you're if you take your breath like someone else will come up with something new and different and better.

17:51And that has implications on hiring speed, like a whole bunch of strategic decisions. Also, granola is growing pretty quickly. So when you're growing pretty quickly, there's just a lot you need to deal with. A lot of scaling is hard. And exponentials, humans have very bad intuitions of exponential growth. You're like, oh, we're fine. We're going to be fine next month. But three months from now, it's not a little bit bigger. It's three times bigger than what you are today. a whole host of systems break every time that happens so i think um being a bit more aggressive on growing the team and looking ahead and looking at what we're going to need in a couple months is definitely a big learning so what does that actually what does that actually look like like what are your kind of hiring plans and how do you have some exercises i guess that you're now doing to say okay in three months we're going to need to be this or we need to gonna we're going to need to have this in place because it's likely will have grown to x number of users like what does what does that look like when you're in the enviable position of just growing really quickly yeah it's good to understand where i'm coming from like i'm a big believer generally in small teams of really motivated capable individuals can accomplish a lot like that's always been my my view when we launched granola a year ago there were four of us on the team so that like that to give you a sense that's a very very small uh team um once you have product market fit though um things start growing and you need a team to support that and in this kind of space where we you know granola up until two weeks ago was only uh available on your mac right uh you like we need to launch windows.

19:38We had to launch iOS. There are so many surface areas where we need to launch granola. You just need more people. So we're aggressively hiring. And it's hard to predict more than six months out, to be honest. It's a question of how many times the team doubles. Do we double once? Do we double twice? Like that's basically the fog of war that we can look ahead into. And there's just, there's just so much to build. Like if we're talking about, you know, again today granola is a notes app and we're talking about kind of reinventing the tools we use for for all knowledge work like there's lots and lots and lots of things to figure out there um so if you're listening to this and uh you're interested in the space please reach out to me we're we're hiring for basically everyone and how are you prioritizing those the the product roadmap like which features come first yeah it's a it's a it's a it's a balance um i think there's two categories, there are the obvious things we should be doing that we're not doing and users are asking us for, right?

20:43And those might be things like, oh, I want it on my phone, I want it on Windows, or I want to be able to export my notes easily, or I want multiple languages. And those are all kind of very clearly that we should, it's very clear we should do those. I also think that we are, as I mentioned before, 2 % down the path of what the future of tools for work are going to look like so i think there's a lot of inventing the new that needs to happen and we need to balance both of those at the same time um and it can be challenging because they need fundamentally need to be a different mode there's like either you're in exploit mode or explore mode and if you're in exploit mode the the goal there is like okay we have something that's working how do we get it to more people as quickly as possible and make it better and you there it's a lot about shipping speed cadence whereas if you're in explore mode like we were when we started granola we didn't know exactly what the product would look like you have to be much more open-ended be willing to to go down different paths and give up on those paths if they're not the right path be extremely close with users right not not trust your your assumptions or your gut because they'll probably be wrong and we're still figuring out how to split up the company to be able to do both of those simultaneously.

22:03And something I have been wondering is, as a founder in this just incredibly buzzy and as you said, such a fast moving space with heaps of companies coming in, lots of them getting a lot of funding, a lot of them trying to hire heaps of people, posting all over social media about, you know, the crazy hours they're working and the crazy growth stats that they have how do you just kind of keep level-headed and not let that get to you get to the team make it feel like you're in a race with like a hundred Usain Bolts how how how can you possibly keep up with them it's a great question I think normally I'm a big believer that you shouldn't you really shouldn't think about or focus on the competition at all.

22:53I think at the end of the day, what matters is, do you build something that's truly useful to people? And most startups fail on that. They don't fail on any of the other things. They just never even get to the place where they built something useful. I do think this is one of those special moments where it's like we've discovered, it's like humans discovered fire, right? And it's like, oh, what do you do with fire? And someone's going to figure out you can cook with it or you can you know heat your house your heat your whatever your cave with it and i do think speed matters and i think you want to find a way where you balance a sense of urgency with the long-term goal which is to build something that's really great um and i'd be lying if i know exactly like if i've told you we have that totally figured out i think i think being in london helps to be honest I think there's pros and cons.

23:47I think whenever I'm in San Francisco, you feel like all this incredible stuff is happening around you all the time. It's also incredibly distracting. We get a lot of FOMO. There's like the shiny new thing that dropped this week or that week. And it's important to be aware of the developments in this space because I do think the developments are meaningful and you should learn from those as you build your product. But if your whole team is just completely, you know, there's a shiny ball here and there's a fire over there and distracted all the time, I don't think that's conducive to building great things.

24:21So in that sense, I actually think being in London can be really helpful. That said, that energy, that excitement, that sense of urgency is also incredible. When people join Granola, they want to have a Silicon Valley-style startup experience in London. A product-centric consumer product like high-growth startup experience in London. So they want that energy. We're an in-person team. So you come in and you can feel the energy of like, hey, check this thing out. I just built it. What do you think? And that's very exciting as well. So I'm still figuring out how to personally live and work in this space in a way that is sustainable and produces good work and makes me happy.

25:09Socratic was based in New York. And as you said, Granola is based in London. Why did you make that swap? Oh, personal reasons. I married an English woman and we thought we'd try London as a place to raise a family. And I think it's an incredible place to raise a family. At least we've been lucky in our experience so far. And what's the case for building an AI startup in London? so if i don't know if i was out in space and i was like i'm going to build an ai startup somewhere in the world like where would i where would i build it i don't know if i would pick london um i think every place has pros and cons i think um my co-founder and i happened to be here and we were then able to assemble a really remarkable group of individuals here and you can argue is that easier or harder in london and in some ways it's easier because it's uh it's like a you know big fish smaller pond right there's there are there's fewer startups here doing similar things fewer startups that have kind of our consumer-centric product-led you know hyper growth kind of profile but it's also a smaller pond right so it's like a you know a lot of the people who've done this type of stuff before like in our case like product-led growth those companies, a lot of those are in the Valley or in New York, and it can be harder to find.

26:32So I think it's a real trade-off. I think if I were selling someone in London, I'd say there's incredible engineering talent that's perhaps not given as many great opportunities as they would be given elsewhere. I think that's the main draw of London, as well as there's an amazing design community here as well. So if you're building something that's very design-centric, it's a great place for it how long do you think london will sustain granola how soon might you need to be fishing in other ai talent pools um so we're based here i want the the headquarters of like product and engineering to to be in london for as long as i can as long as i can predict and i want to build out a team here but as i was saying before there's just so much we need to build and so much opportunity that it really kind of comes down to do we meet the right people who are like-minded thinkers with the right experience and they're i mean we will probably have to open up an office in new york or san francisco like that's probably going to happen um but it's not a priori decision for me it's really the individuals really matter in that case so who are like who are the orbits we want to bring uh you know the people whose orbits we want to bring close to granola and build out from there so i mentioned in the intro you've just raised 43 million dollars what will most of that money go towards it's hard to predict the future most of that money will probably go to costs of running granola and building the team that we need so running granola is not it's not cheap right we do transcription we do a lot of ai calls uh and And there's a lot we need to build in this.

28:22We need to get the best talent out there to build it. We didn't raise the money with a specific, okay, here's our budget of exactly how we're going to spend it. It's much more of a, it is a competitive space with an amazingly ambitious vision. And we're going to need capital to have a real shot at that vision. And the specifics of how exactly that breaks down, I think, well, time will tell. I think it's a fool's errand to plan too far in advance in this space. But I know it's going to be competitive and I know there's a big prize at the end. So it felt that being well capitalized would help us get there.

28:59Did you go out to raise or did investors come knocking? We haven't made a pitch deck since Sam and I started the company. And what is your North Star metric? Do you actually care that much about revenue at this point in time or are you focused on other metrics? we think we're in this special moment in time right now where people are forming new habits with these new tools so our north star metric is all about number of users and how much usage how many things they're doing in granola revenue i believe will follow like our revenue graph is is up and to the right but it's not what's driving our decisions that our decisions are all about how do we get granola in the hands of more people amazing i have a few quick fire questions to end on sure first one why is granola called granola so that's my co-founder sam he um the story he tells is that uh he had when he was creating the github repo this is like the place where you save your code um you have to choose a name and it's hard to change afterwards and and he was uh at the time eating a bowl of granola and he looked out and he said all right i'm gonna call it granola but sam's like a very kind of he's very English that he'll undersell himself he's a really thoughtful i think granola is an amazing name i think a lot of the names in our in our space in the productivity space are like super this like optimize that and something about granola is very kind of human it's it's something that's like a nice part of your daily habit but that still tastes good but it's healthy um and i think it's it's very on brand for the type of product we wanted to build what's the best bit of career advice you've ever received i think when i started out in my career i my time horizon was too short you know i'd look at oh okay should i like i could join this company like this job opportunity or this job opportunity and i would look at it in terms of oh okay well what what makes sense for the next 12 months and that's a terrible mistake like really you should be thinking about this uh like what what's the right decision on the timeline of a decade or two and um because the things that accrue over time are a lot about relationships like people you get to know skills you you learn just exposure to different environments and understanding what what you like or what you don't like and none of those things factored into any of my decisions when i was younger um some of the best decisions i made were were the decisions that were not um i made with my gut it's like my i think my analytic brain said oh clearly this is the right thing to do but i'm just going to do this other one because i I just want to.

31:35I can't really articulate it. And I think sometimes my gut actually was taking some of those larger considerations into account. What's the biggest stroke of luck you've had in the world of startup building? I think the biggest stroke of luck I've had is my wife's incredible. It's hard when you're choosing a partner. It's hard to know what that's going to be like. We have two kids and doing a startup. she's also a startup founder so having two startups and two kids at the same time is is a lot and um uh i think there's no way of knowing when we start dating someone how we'll be able to evolve with that person and i think i've been inordinately lucky there um and i think my second circle luck is my my co-founder uh just sam's a great human and um we didn't know each other very well before we decided to start good all together so i yeah i guess it's all about the people you and your wife must be very very good at time management um final question if you could swap lives with any other founder for a day who would it be and why i think for a day sam ottman like i definitely don't want to be sam all the time but being in that seat would be fascinating amazing thank you so much chris thank you so much amy thank you so much for listening to this episode of the sifted podcast if you enjoyed it i have some great news for you which is that we will be making the sifted podcast fortnightly very shortly so please keep an eye out for it more regularly in your podcast feeds and if you do love it please rate and review us share us with your friends it will really help us grow the podcast and in the meantime if you want sifted every single day in your inbox you can get that if you sign up to our daily newsletter, which you can find at www.sifted.eu, where we have all of the latest on hot, hot AI companies like Granola and the investors that are backing them.

33:37Thank you so much for listening. Bye.