468: How to Fall in Love with a Problem with Uri Levine of Waze

30:05And therefore, simplicity is the only key that you can actually create better adoption through simplicity. I want to speak about something else, by the way, which is one of the biggest, ties back into DNA and culture and reasons why startups failed. and I spoke with a lot of entrepreneurs that their startup failed and asked them why what happened and about half told me the team was not right and I kept on asking okay what do you mean the team was not right and and what I heard the most was we had this guy not good enough or this guy so not good enough was the main reason and another reason that I heard quite often was we had communication issues right something that I actually called ego management issues and then ask them the most interesting question.

30:57When did you know that the team is not right? And that was actually a pretty scary answer. All of them told me within the first month. So he said, wait a minute. If you knew within the first month that the team is not right and you didn't do anything, the problem was not that the team was not right. The problem was that the CEO did not make our decision. Making easy decisions is easy. Making hard decisions is hard. This is why most people don't like to make the hard decisions. Now, what happened is that there is someone that shouldn't be there and the CEO doesn't do anything. The challenge is that if there is someone that shouldn't be there, everyone knows.

31:40Everyone knows and the CEO doesn't do anything. The result is always the same. The top performing people are going to leave. They are going to leave because they don't want to be in a place that is unable to make hard decisions. and they're going to leave because they have a choice. Now, if you are building an organization that you have people that shouldn't be there and are still there, and the top-performing people are leaving, that's the beginning of the end. In my book, there is one of the chapters that is called Firing and Hiring. And when I send the book proposal, some of the publisher told me it should be hiring and firing.

32:22And I said, no, firing is hard decision. Hiring is easy decisions. You have to learn how to make hard decisions and you have to learn how to fire because before you can hire. And the, the, the, you know, the major insights of this chapter is that for every new hire that you have, mark your calendars 30 days down the road and ask yourself one question. knowing what I know today, would I hire this person? Now, if the answer is yes, then go and tell that person that you are very pleased with their performance and they are exceeding your expectations. And if you can give them more equity, that will be a great time to actually give them more equity.

33:06But if the answer is no, fire them immediately. Because from this point on, they are creating damage to the entire organizations and they are creating damage to themselves. They are already set on a trajectory of not being successful. And everyone knows that, right? And so you are creating damage to yourself by not making the hard decisions. You are creating damage to the organizations that they are watching you and they know that this person shouldn't be there and you are not doing anything about it. And you are actually creating damage to this person. This person is not going to be successful.

33:43it's way better for them to leave now and try to find a different place that they will be successful and and this is critical right because when you don't do that then you end up with actually creating you know not stepping up to the dna that you wanted on one hand but also and by the way if you ask me what part of the dna document should cover that we make mistakes and we fix them fast that's it um and um and and so you know when i look at the different co's that have to deal with it with you know one of the management members and i eventually ask them when did you finally fire that person i heard only one answer too late and uh and so for a second i would say I, you know, occasionally I speak at entrepreneurship conferences.

34:41And when I tell that, occasionally there are people coming to me afterwards and saying, now I know what I need to do. So if I trigger that for someone during this podcast, and as a result, they are doing the right thing. And as a result, they are increasing their likelihood of being successful. Then I did my part. And, you know, I'm an entrepreneur. You know, I built ways. I built movies. I have half a dozen different startups that I've started and another half that I'm helping them to become successful. In that part, everyone knows. But there is another strong personality of me, which is being a teacher.

35:23So I will feel equally rewarded when I build stuff myself or I actually guide someone to build it. And this is why I'm, you know, helping a lot of startups or ending up to be a mentor for half a dozen of startups. and in helping the CEO to become more successful. And this is why I wrote my book. I wrote my book in order to help entrepreneurs to become more successful. That's the book, by the way, Fall in Love with the Problem, Not the Solution.

35:54And I'm fulfilling my destiny with this book because my destiny is about value creation. And I have two ways of doing that. One is building startups that help people to, you know, that help people eventually doing good and doing well. And the other one is, is help entrepreneurs to become more successful. And at the end of the day, you know, you want to look at these, what is changing the world? And the reality is that these are entrepreneurs. You look at all the great things that we are using, and they were all started by an entrepreneur not that long time ago. And so you look at the top 10 companies of the world and two of them are about 45 years old, but the rest of them are less than 30.

36:41This is absolutely amazing. And if I can help them to become more successful, then I feel rewarded. I feel that I'm making a bigger impact. I like that this is fulfilling my destiny. So going back into the journey, and this is really important, I want us to think of maybe some of the top tech companies of the world, right? So Google and Amazon and Netflix, that they're about 25, 26 years old. and then maybe Facebook and Tesla and Airbnb that are about 16 or so, even less than that years old, and ask yourself how much of their value was created in the first decade versus rest of the time. Now, rest of the time could be six years in terms of Tesla, 16 years in the case of Google and so forth.

37:45And then, but the aggregation is actually ended up that only 10 % of the value was created in the first decade and 90 % in the rest of the time. And the reason is rather simple. What companies do in the beginning of their journey, they try to figure out product market fit. And once they do that, they go into the next part of the journey, which is maybe figuring out growth or figuring out business model. And then they go to the next part of the journey, which is if you already figure out growth, then you need to figure out business model. If you already figure out business model, then you need to figure out growth.

38:25And only then you're ready to take on. And that times, that three journeys is about a decade. It's a long journey to get there. and it's a long watercoaster journey affair the hardest part for the ceo is switching years because when you move from product market feed into the next phase everything changes the focus of the companies changes the the the people that you need to have into this journey some of them are different the most important thing up until now what was retention is now not the most important thing now we need to figure out a business model so we need to you know we need sales we need different types of organizations or now we're trying to figure out growth and we need you know a growth leader that is not the product leader could be but it's probably not the same one and so organization changes focus of the companies changes and potentially you as a ceo is no longer are the right CEO for the company.

39:32And you might need to find a replacement for yourself. Now, these three phases are different DNAs of the company. They are not DNAs, actually more of a different focus of the company. And that is pretty dramatic changes. And when this happens, then you have to shift gears because if you stuck in a previous phase, if you're trying to keep on improving product market fit, even though that you have reached a nice retention, you're wasting your time. Your opportunity is now to go and figure out something else. And if you're not doing that, then the challenge is that you're going to actually remain in your place.

40:13You're going to get stuck in the phase that is not the phase that you need. And most people have hard time to switch gears. So this is really important to understand that you have to switch gears and you don't need to prepare for the next phase. As soon as you get there, it's an overnight flip that you need to go into the next phase. Because until you get to product market fit, nothing else matters. Once you get there, then you are already there. You don't need to change the product anymore. Obviously, you will make more adjustment and more improvement and you will need to deal with capacity and scalability and you will need to deal with, you know, increasing the addressable market.

40:59So let's say that you started your product in English and now you need to actually have more languages in order to support a bigger addressable market. But the main issue in terms of creating the value, you already established that you don't need to try to perfect that. you don't need that in order to win the market. Now it's time for you to go and win the market. Hey guys, I hope you're enjoying this episode and learning a ton. As you know, in this series, we interview some of the greatest founders of our generation to find out how they did it. However, if you're thinking of starting your own business and you wanna hear from some incredible stories from everyday people like you or I who are actually in the trenches, only been building their business for maybe one year or two years, like that are building right now and they're really in the early stages, but they're getting success.

41:48You should come and check out our new podcast From Zero to Founder, hosted by our community manager, Molly Flynn. These are in the trenches stories from our very own successful students that have gone through some of our programs. People just like you who are deep within the process of building their very own successful business. These are the founders of tomorrow. You can find the From Zero to Founder podcast on all platforms. And remember, it's founder without the E. All right, now let's jump in the show. You talk about product market fit a lot, and you said that it took Waze five years to hit product market fit.

42:29Why so long? So it was four years. And look, Waze is, while if I will be here in 2008, and I will tell you the story, you are going to download the app immediately right i'm going to help you to avoid traffic jams you already like that right and so the story was in place what happened is that people downloaded product and in in our journey look we we started in 2007 and that was only the three of us back then and the first version of ways was running on a pda remember long long long time ago there were dinosaurs and then PDA and then Nokia phones. And today we all have Androids and iPhones, but this long time ago is 15 years.

43:16And then we raised capital and we started officially the company in 2008 and we built the first version running on Nokia phones. So that was in 95 back then. And it was actually, we launched the product in 2009 in Israel and it was actually pretty good. and so we decided that wait a minute this is actually crowdsource everything not just not just traffic information but also the map itself so the map is being created by the people and we say that wait a minute if we if this turns out to be successful in Israel we can launch that everywhere and this is what we did at the end of 2009 beginning of 2010 and people like the story right so we the drivers are going to fight traffic jams together and so they have downloaded the app but it was not good enough.

44:05If you would try that in Sydney, in trying to go from your home to your office back in 2010, then the route that you are going to get might not make sense. And you will basically say, this is not good enough. So this is exactly what happened. We realized that it's not good enough and we did what we should have done, and this is speaking with drivers. And we asked them, what didn't work for you, right? So we knew these drivers tried that, and they are not coming back anymore. And so we asked them. And they told us, oh, that was lousy. That was a piece of crap. That was not good enough. And so we fixed pretty much everything that they have told us.

44:45And we launched the next version a month later, and we know that this is it. And it's not. So we're doing it all over again. We speak with the drivers. We realize what doesn't work for them. We build the next version, and we go with the conviction that this time it's definitely going to work. And it's not. Another iteration, another iteration, more than a year of iterations until we eventually got it to the level of good enough. Now, in some of those iterations, you're making baby step forward. In some of those iterations, it's actually worse than before. In some of those, you're making a leapfrog.

45:21Now, you don't know which one is which. If you would know, then you will only do the leapfrogs and this is it. Now, when it's starting to become successful, then you actually see that as like a ripple effect, right? Happening in the US, one metropolitan after the other. Los Angeles first, and then San Francisco, and then Atlanta, and Washington DC, and New York, and Chicago, and Miami. One metropolitan after the other. In Europe, one country after the other. So Italy first, and then Netherlands, and France, and Sweden, and Spain. and in Latin America, one country after that, or Colombia first, and then Brazil, and then Mexico, and then rest of Latin America.

46:01And that was 2011, right? And so we started 2007, we only got it right in 2011, about four years to get there. And what happened next is Waze is extremely successful because of the use case. So the use case is that people are using Waze every day. They're driving to the office with waste. And when you have high frequency of use, you are going to end up with a very simple growth strategy. Word of mouth, you don't need to do anything. Because people are using it multiple times a month or multiple times a day. And they, in some of those, they have an opportunity to tell someone, and this is exactly what's going to happen.

46:47So if your product have high frequency of use, and you figure out product market fit, your next phase is actually growth because this is going to happen most of it by itself. And you don't need to invest in it. And after you figure out that you are actually growing faster than everyone else, only then go and figure out the business model. And so in 2012, Waze was actually growing faster than the entire navigation combined, right? So you take all navigation devices and all in-car navigation system and all navigation apps. Where is Outproof, all of them together? And in 2013, Google came with a proposal to acquire us, and we said yes.

47:27And I left the day after so I can build more startups. Now, this is really important to understand because in many cases, we would like to think that we actually have the ability to influence on the journey. So we figure out product market fit, and now we decide that we're going to figure out business model. It's not up to us. It's up to the use case. If you have high frequency of use use case, then go and figure out growth first. If you have low frequency of use, then you unfortunately will need to acquire users throughout your entire journey. And if this is the case, then what you really want to do is figure out the business model first.

48:12Now, the business model is something because you will need to actually make money on based on every new users in the future. And if you have a word of mouth, then you first of all need to capture the market. And only then do that. Now, if you think about what happened to the market in those 15 years when we started until today, then 15 years ago, nearly no one had a driving app. If you needed to go someplace that is new, then you would open up paper maps, right? Then you will look around and you'll figure out, okay, this is how I'm going to get there. And sometimes you'll say, this is how I'm going to get to a prop summit location, and then I'm going to ask someone how to get there.

48:54And no one was using an app or digital service. Now, today, there is nearly no one that is driving without an app. And the good news is that Waze is, in most cases, is the one that is being driven the most. You know, people occasionally ask me whether or not it was the right decision to sell at the time. And I will tell them, look, end of the day, there are right decisions or no decisions. Because when you make a decision, you don't know what it would be like if you will choose a different path. If you would ask me today if Waze would be worth way more than$1.1 billion that it was acquired by Google back in 2013, Absolutely yes.

49:41But what we don't know is whether or not waste would become what it is today without that decision back then. And so when you make a decision, it's the right decisions. And if you eventually get and hit the wall, then make a new decision. because what it turns out is that what makes entrepreneurs successful, what makes CEOs successful is few, very, very few behaviors that are consistent. One of them is never giving up, right? So the perseverance, right? The attitude of we are not going to give up, even though that we are going to have a long journey, that we are trying to cross a desert of no traction, we are not going to give up.

50:24We might die, but we will never give up. And this is the first one. The second one is making decision with conviction. Because if you don't make those decisions, what's going to happen is that everyone else is looking into your leadership and you're basically saying, okay, this guy doesn't know how to make a decision and therefore we are less likely to become successful. There is a Harvard Business Review research that actually was looking at 16 ,000 CEOs and their behavior, and they have indicated that making decision with conviction is the most significant correlation into successful companies.

51:09So making decision with conviction is the second one. Listen to users, in particular in the early phase. Now, This is really important, right? So the difference between a startup and a corporate is that a corporate have their product and they have their go-to-market strategy and they have their pricing and business model in place. And all they have to do is keep on doing the same thing over and over again. A startup have no product-market fit, no business model, no growth strategy. They have absolutely nothing. They are in a discovery of these elements throughout their journey. And so obviously we will need different behaviors in these cases.

51:53But what we have to do in order to become successful here is that we have to listen to our users or customers. Because if we don't, we are unable to figure out product market feed. And if we are unable to figure out product market feed, then we will die. As simple as that. Are you hesitating to take the next step in your e-commerce journey? Founder Plus has you covered. With proven frameworks tailored to your business needs for fast results, a supportive community of over 30 ,000 like-minded entrepreneurs, and weekly live mentorship sessions, Founder Plus is your key to success. Try Founder Plus today for just$1 for seven days and start building your dream business with confidence.

52:31You can visit founder.com forward slash start dollar trial or click the link in the description to claim your trial. And leadership. And at the end of the day, you have a team of people that needs to follow you. And you want them to want to follow you. And this is going to happen through decision-making, through interactions, through communication, through a lot of leadership styles and tools that they will eventually want to be part of this journey. and if they don't want to be part of this journey then when it comes when eventually it's going to become really tough and you are in the middle of the desert of no traction you are trying to get everyone aligned and keep on walking in the desert some of them are starting to give up and this is going to make it really hard so Uri I could talk to you all day You've given us basically a product development masterclass and basically how to find product market fit.

53:38A couple of last questions that we have to wrap. This has been awesome. Thank you so much. We've got a question from one of our students in our program, our subscription product and membership product founder plus. This is from George Edward Benton. And he said, what's the one thing that hasn't been asked in an interview from you which you wish someone would ask you? So, you know, let me say it differently. So, end of the day, throughout this interview, you let me speak most of the time. And so, obviously, I spoke out my mind. And I don't think that there is something that you should have asked me and you haven't.

54:21Because I kind of carried a speech in trying to deliver messages and value to entrepreneurs. And I think that this is really significant. But in general, I would say the following. Today is the first day of the rest of your life. and if there is something that you are basically telling yourself, I wish I had that done differently, then today is the time to change it. We'll move to the hot seat round, rapid fire questions and answers and then we're at time. So the first question is, what industry will the next ways emerge from? So for me, there is no industry. This is a matter of a problem that it's worth solving And that could be in the medical space, in the fintech space, in mobility, in transportation, in any business, in any industry that you like.

55:24It doesn't make any difference. If there is a problem that it's worth solving, then it's not about the industry. It's about the problem. What's the biggest problem in our world that a business needs to solve? Oh, there are a lot of them. You know, the good news is that there are a lot of problems. The bad news is that there are a lot of problems. And so it's not about a problem that you need to go and solve. It's a problem that you actually get emotionally attached by, and you have the urge of solving that problem. And only then you go and validate whether or not this problem is actually big enough or not.

55:58But it has to start from the inside. Let me give you an example. So think of medical services in the US. They are five times more expensive than they are in Germany. Now, it's not that they're better than Germany. They're simply five times more expensive. And then you're saying, wait a minute, medical services in the US, this is 10 % of the GDP, right? And this is way overpriced. And you are saying, okay, this is the biggest, biggest problem that I can think of in the US. But if you don't care, if you're not in the US, if you don't care, then the fact that I will tell you this is a huge problem doesn't move a notch for you.

56:36You don't really care. you have to start with something that you care what's what's the most important skill for an entrepreneur to invest in early in their career i have five children they are at the ages of 32 to 20 and obviously i see them at the beginning of their career and i'm trying to guide them and uh and i would say there are probably few skills that you need to acquire um that are going to serve you well throughout your entire career regardless of what you're going to do and and one of them is working in teams right so you want to work in a place that we actually have other people working with and build those soft skills relationship of of working in teams and the second one will be salesmanship i want you to go and take a position in sales so you would actually understand what it takes.

57:33It's really hard. Because what happened in sales is that, at the end of the day, look, in most of our positions, there is no competition, there are no challenges that you face with the dialogue. There is, in general, collaboration, and not confrontation. In sales, there is confrontation. You need to convince someone to take an idea from your mind and plant that in their mind. And then you need to convince them to take money out of their wallet and put it in your wallet. And these two things are hot and you need to learn them. And the best way to learn them is at the beginning of the career. Now, it doesn't say that you need to eventually become a salesperson or work in that, but what you need to do is understand what it takes, because this is pretty.

58:24And then the third one will be about leadership. You need to figure out a way to make people who want to follow you. What's something you've learnt today as an entrepreneur? Sorry, can you repeat that? What's something that you've learnt today? I learn every day. I learn different things every day. Some of them I adopt fast. From this point on, I will try to use them. Some of them I adapt slow. So I learned that and still I need to learn that multiple times until I will feel that this is the right thing for me. And some of the lessons I don't learn. I'm stubborn, right? I not always learn the right lessons.

59:14All right. Last question. If you could have dinner with any entrepreneur dead or alive, who would it be and why? So I think of maybe three major people that have changed my attitude, and I look up to them and I say, basically, this is as close as it gets to an amazing person that have changed dramatically in the world. The first one is Thomas Edison. And the reason is that not only that today we are all using this product and this is obvious, but in his journey of trying to create electric light, he failed so many times. And one day someone came to him and said, you have failed a thousand times.

1:00:04By the way, that was not a thousand, it was 770. But you have failed a thousand times. Why don't you give up? And he said, no, up until now, I found a thousand ways that it didn't work. And each one of them made me closer to finding the one that does work. So this attitude is unique. And then you look at the recent ages and you basically tell yourself, okay, wait a minute, there are two absolutely great entrepreneurs that have changed dramatically the world and have done that multiple times. Steve Jobs in Elon Musk. Love it. Well, Uri, thank you so much for your time. You shared so much wisdom and experience, and this is really going to help our community.

1:00:51I personally learned a lot as well. So thank you again. And last question, where's the best place people can find out more about yourself, your work, and your latest book? The book is probably available on Amazon or, you know, online sites. So this is easy. My website, RayLevine.com, as simple as that. And then this is where all of my startups are. And this is all of my, you know, different presentations and a lot of the stuff that I'm building is right there. Amazing. Well, thank you so much. Thank you. Hey, guys, I hope you enjoyed this interview. As you might already know, our mission at Founder is to help tens of millions of people every single week with our content, either start or grow their business, which is exactly why we're partnering with world-class founders such as Damon John, Alexa Von Tobel, Greta Van Riel, and so many more to teach crucial skills such as negotiation, finance, e-commerce, and so much more.

1:01:52So if you'd like to get access to these free exclusive trainings, please go to founder.com forward slash free. These are 100%. We go super in depth on teaching a particular topic and I know that you're going to love them if you enjoy this podcast. So just go to founder.com forward slash free. All right, guys. I'll see you in the next episode.