20VC: Why Hiring in Tech is Broken and Founders Need to be as Good at Firing as they are Hiring, Why Product Differentiation is Unsustainable & Why the Current Generation of Tech Employees are Entitled and What Needs to Change with Jean-Denis Greze @ Plai

22:50If you try to work for a big company, you get hammered down. They like, you don't let you work that hard. Like, you know, people like you're making us look bad. Like, they like, won't let you use your workstation off hours. Like, it'll be weird. But if you're a startup or if you're doing something new or you're like an independent, you have your own little company like a law firm or a small investment bank, you can crush it because your competition's working 40 hours a week and they're going on vacation all of August. And so if you're the law firm who's willing to be available from July 15th to September 15th, like, welcome.

23:20People will go and work with you. The way I would talk about tech is, you know, tech 20 years ago, it really truly was tech -broy in the sense like everyone was in the early 20s. Everyone was working all the time. There was no work -life balance. And as tech grew and had a lot of success, there was this movement around like, hey, if people with kids want to be successful here, people from different walks of life, like we want to create an environment where you know you can work 40 hours and still do great work and have a great room in relation. And that's what's happened, right? Like people have fought these battles and the culture has changed.

23:50But the culture has changed so much that now I have people who want to work hard, who are like the French person at the big company. They're like it's hard to work hard and I feel guilty doing it and all these things. And what I always tell them is like you're thinking about it wrong. It is much easier for you to get a promo. It is much easier for you to look good if you're willing to do those things because the average now is truly going into this like you know 40 hour week kind of thing. And I feel that the relationship of many tech employees to their tech employer is the same as like a French citizen to the French government.

24:19The employer shall provide all the big problems in life or the fault of the employer like kind of this weird like lack of ownership mentality. It has the entitlement in it for sure. Overall and why I think innovators and small companies will continue to have advantage is because I do think if you care more and you're more focused and you're willing to go the extra mile, you will build better things. And can't ask everyone to do that. So I like the fact that we have work -life balance. But I think for the people who really like want to push, they'll have more career success. And one of the situations that I find always interesting are new grad hires across the industry.

24:52Really, these brilliant, brilliant people, right? And who join the tech companies. And the first time in their life when there's not equal treatment is the first promo cycle at their company. When some people get promo to the next level after 12 months, some it's 18 months, some it's 24 months, some it's 30 months, and it happens and they're like, but I'm as smart as the other people. And then suddenly it's like, no one cares that you're a smart, but people care about is, are you a top producer? And there's different ways you can be a top producer, but when everyone's as smart as you are, what's going to differentiate your success?

25:23And I think hard work will matter now. You can't be surprised when someone outperforms. Do you know what separates the one that does get the promo than the one that doesn't most often and this is not me being an old man boomer It's one who's in the office more as well So you are you're back to it. I totally agree. I do want to ask one final one on people And it's just a question around do you believe that you can be truly great and have work life balance? And when I say truly great let me put a placement around it build a ten -billion dollar plus company So I know a few truly great people who have the right view point and are really good at motivating and delegating.

26:01They create the structure for success like the North Star, the product roadmap. They're able to motivate other people to go in that direction. That person can do it and that person could be a great CEO. It's possible. But as a whole, no, you need to do great things. There's a great sacrifice. You'll find exceptions like one -offs, but I think on average it doesn't play out. And the analogy that I would say is to like a professional athlete, a LeBron James or what not. There's plenty of people who are professional athletes who from a pure physical understanding of the game they're there and who just don't put in the work and there's people who put in the work.

26:35With athletes, we're totally okay to make fun of the ones that don't put in the work. The sports writers like make fun of them all the time. They're like, ah, it's a 15 year career. You get one shot of this, like you get your big payday and then you stop trying his hard. But like what's the difference? You know, we're like, oh the athletes career so short They should work as hard as they can for that period man life is short life is short for all of us You think you know your professional career of 40 years is like much longer than the professional basketball players 15 years It's not that much longer due to our life is short our time on earth is short So you choose how you want to spend the time on earth and if what you care about the most is like having a great life The work is not what gives you fulfillment and not the thing that you care the most about I think tech is awesome because we allow you to do that and still degree work and be creative and work with awesome people But I think if you really really want to have like the outsize impact I do think the incremental our works the incremental focus the caring more the thinking about it in the shower at night before you go to sleep Writing the extra email talking to an extra founder caring about the market a little bit more it all matters I do want to go a lay a deep beneath people though, and I want to discuss something that you said which I thought was fast and he said product differentiation is not a sustainable differentiation.

27:44Rav from a product person in the CTO, so help me understand this one. Great products have won for the last 15 years. We see that in consumer for sure, but we see that in B2Bs ass. Companies of the 90s and 2000s like PeopleSoft and Oracle, the UX is not good. But it solves business problems. Cooper or Bill .com. Suck. Yes, good point. Workday also sucks, right? But Workday is much better than PeopleSoft. It's just night and day and actually bill .com versus like a non internet billing system is incredible It is like earth shattering. Here's a couple of thought experiments. Imagine pre -stripe to stride you want to process credit cards It's like a hundred thousand dollar down payment.

28:24It's gonna take you six months to do through the contractual You're gonna get this shitty form compared that to stripe stripe. It's like you sign up on the website You can use the epi immediately once you have this amount of traffic they do a little more KYB on you, blah, blah, blah, you scale. The delta in that in value is like going from one value to 90 units of value out of 100. If you go to the Stripe website now and you look at what they've launched on the developer experience, it's awesome, but it's the difference between like 90 and 93. I think over the last decade on a lot of product experience, there's been a lot of competition on UX.

28:58But I think, given the current technology trends, a lot of competition has happened in UX and I'm not seeing UX ideas that are 10x to where we are today. Number one, and number two, you can copy UX. And this is really important. And there's a couple companies that are doing this right now. I think the most famous would be Ripling. We're like Ripling's building like the next workday. They've taken like, oh, this company does Adria Analytics. We'll like copy 90 % of their good features and we'll make an integrated version that works with your employee directory. You want to do like global billing?

29:27Like, we'll do a 90 % as good version of global billing. but we'll make it even easier because we'll deal with all the intercountry thing on our own. They do that and they're building a suite that basically takes all the vertical products that have one for verticals, integrate them into a combined experience and they don't have to innovate on pure UX for any vertical, then just copy the best. They're sounding sweet, right? And that's where the value will come from. I think the value won't come from out of this world UX. I think it will come from a suite of things that is cheaper, works better together, than the highly verticalized products that we've done today.

30:01Can I make a case, an alternative case, which is UX isn't innovated on now as it was before because of the maturation of platform life cycles, like we are at far into the PC, far into the mobile. My question is, do enabling technologies like Apple Vision and AI allow us new dimensions of UX that will recreate product differentiation as a sustainable? I think for the existing startups, what you've got to look at is it probably isn't going to be UX and there's probably going to be consolidation because we've oververticalized things by going after every like Bit of the software with a slightly bit better UX here there and I think the value now is going to be from tying it all together And there's a few companies that are doing that and I think those are going to be the big winners What do you mean tying it all together?

30:52Like there's the compound startup like Rip playing that. Yeah What do you mean by tying it all together being where the value is? That's a perfect example. I think you have to ask yourself like who lives in in Salesforce versus lives in like GONG in a handful of other tools. I think security tooling is the same way. A long or short Salesforce. Sales force to me feels like it's increasingly a database, a store, and not where the UX happens. But because everyone still has to store the data in Salesforce, it's still like the base thing that everyone buys. But like people are going after them. There's going to figure them out.

31:27I would say I am bearish on Salesforce ability to stay number one over the next decade. What it takes to win, if it's not around products, it doesn't focus on setting the right north star or understanding where to focus. How do you think about how to set the right core metric and what effective north star identification is? I think now compared to five years ago I'm more wary of like the one metric to rule them all. I've seen what I was saying, the difficult part of product not be solved by setting the right metric. It certainly helps, but it doesn't answer all the questions. So we have a metric around conversion.

32:02And it's the metric that matters the most or customers, meaning when someone tries to connect their bank account, are they able to connect the right bank account for that use case? And we do a ton to track conversion. But if you think about the work that we do on conversion, let's say you're trying to go from Paris to Milan. One way to go from one to the other is to walk. So you say your metric is like amount traveled like percentage of distance between Paris and Milan traveled So you go walking so that one's awesome because every day it goes down and you can predict very clearly when the person will get to Milan And then there's another person that the size take a train So what that person looks like is walking kind of in the right direction because the way train stations work in Europe They're journaling the right direction where the destination is they go slowly and then they stop there and then they go really fast And then you have another person that's taking the airport.

32:49So they're like going in the wrong direction, then they stop for a whole while, and you don't understand what's going on. And suddenly, they zoom over to Milan. That clearly the best mode of transportation, the fastest mode of transfer shift consistently is the airplane. And we know the airplane is better because we've done the work, and I know they exist, and they go. But a lot of product work, actually, at most companies on a metric, will incentivize the walking kind of behavior. Because it's measurable, it's clear that it's going to get you in the right direction in every day you see progress.

33:17The best work is the work where you're building an airport and inventing airplanes, and then a few years later, you can hop over from one place to another, not in 27 hours, but in one hour. So whatever metric you set, and you should have a metric and counter metrics to make sure people don't abuse it and don't gain the system and should draw that correctly, I think the really hard decision always is like, hey, do you do incremental work that has more guaranteed payoff? And how much are we willing to invest in things that could be real multipliers to the a product goal, but like you're not going to know for a bit if it's successful.

33:46And sometimes you won't know for a while and it's going to feel like it's failing. And what happens is your PM is at the airport and he's been waiting for his flight that's delayed. And suddenly he gets his text message from the boss and the boss says, okay, just take the train and that's stupid because he goes and take the train and then the airport, the airplane's ready to go and you miss the airplane. And that's what happens, right? You like start the project, it's ambitious. You work on it for nine months. The metrics aren't moving. You have revenue pressure and you're like, ah, we're not going to do it.

34:11I think the metrics are amazing. You need some way to judge whether you're making progress. You need leading indicators. You need North Star, then you need leading indicators of North Star, but you need judgment and gut. You can't abdicate the judgment and the gut to a metric. You need someone to go on limb and say, I believe that this will work. I'll put my promotion and my career on the boat. Like we're gonna have five people work on this thing. I think that's the part of product that's really hard. Do you do increment what today at Plankton? Yes, for sure. Yeah, and this year we have a conversion goal and we hit our annual goal on conversion in six months And we did it mostly through incremental work because people were smarter about looking for opportunities And it's a huge win for the business But we still have a home run on that and the home run matters more over any time that's conversion That's very difficult for competitors to get if you achieved it in six months Would you not say that as an effective goal setting?

35:04I had so far off you capped or could be done significantly If I knew the future, I would bet everything on the moon shots. I really fundamentally think that's the hard part of the job. The thing for me that's always clarifying, and I'm not nearly as good a product leader on this as I wish I were. We're building businesses. Long term, what matters is competitive advantage. It's a thing that you can do that is hard for someone to copy or expensive or someone to copy or who led last a certain amount of time. When you're completely like plied, where you already are better across the board than most of your competitors, I think the one rule for us is, what can we do to extend the window of our competitive advantage, even if we're giving up short -term opportunities to short -term increase the competitive advantage.

35:47It's hard to say no to the obvious short -term wins, and I wish I were able to do it more and to convince more people that we needed to look more at the things that over two to three years really win, because we have that luxury. We're ahead enough that we can invest in the two to three year thing. I'm one of your angel investments. How should I think about competition? I don't think I'm a very good angel investor because I like the founders and the ideas more than I do it for, you know, like financial optimization of the game in the early phases that I think if you're too focused on competition initially, you usually just don't build the right thing or you don't figure out the wedge that gets you to win and go to market.

36:22At any scale, like at Plaid scale, when you get to 50, 100 million in ARR, you're living in a world of competition. If you're making a lot of money at high margins, like people will come after you, then I think it starts to become important to have things that are difficult for others to do. So, you know, we were talking about product and product differentiation. The saying is always like distribution is your product. Your ability to get new customers and to sell more to existing customers. I think often a certain scale is what ends up allowing a lot of companies to grow more and more and more.

36:52Like, that's a high confidence way to grow. Reputation, network effects. If you can have brand, or much better network effects, those are incredible, but those are rare. There are a lot of successful companies that don't have huge network effects. So, you know, there's a hierarchy to competitive advantage and ideally you start to develop it But like at an angel with someone who has like a million in ARR, I don't know if you disagree tell me I just haven't focused on it because then I think very few companies would pass the filter like I would make like three Investments a year and not 20 I totally agree I'm just intrigued by something you said before those me which is your startup is a zombie and life is too short to keep trying You know, we always hear never give up and I'm always an advocate for never give up As your VC, well, I mean, I, VCs say, I mean, a lot of VCs are saying, give me the money back.

37:37I'll take 60 cents on a dollar. I don't think the most of the VCs care. I love good friends. I have a lot of like two friends, you know, like hang out in the weekends, adventure firms. I love them. They're great. I make fun of them a little bit, but... They make fun of them for what? What do we, because they're the fun, they're the fun. I don't think they work as hard as I do, but they make more money. I 100 % you just chose the wrong business. Yeah, I know. I just wouldn't be. They wouldn't make me happy. The way I think about venture capitalists and the value overall is they're distributing the chance at an outsize return.

38:05You find a lot of smart founders, you give them money and then some of them really hit it out of the park and you keep supporting them as they grow and make giant businesses. So if you think you're on a human level, it's like, well, a bunch of founders are going to fail. If you're measure for success as a $10 billion company, like 95, 98 % I don't know, some really high percentage of founders are going to fail. And that's just life. And so if you're a founder, you know that you're just part of a capitalistic machine to get to innovation and you do it Because you love it and because you believe in the mission for all these irrational reasons you do it But you always have to ask yourself like is this worth my time on earth?

38:41And as we said earlier life is belief is short and right now what's happened is there's a bunch of founders who raised a lot of money With businesses that in reality don't quite have the product market fit that they thought that they would and when that happens You got to be really, really careful because it's easy when you have three years of runway to spend another three years of your life Trying to make a thing that has a very low chance of getting to product market fit to work And I think a lot of founders are actually asking some of the question like reset Just do a totally different idea or like return your money and then decide if you want to be a founder again Or like start a product of the bigger company or whatnot and there's a lot of these I think there's zombies where they have some revenue, but they just don't have venture growth So you could turn into lifestyle business, but like, is I really why you want to start a company?

39:24It's not. Otherwise, you wouldn't have taken venture capital funding. And I think people are going to take good years of their life and of creativity. And they've been fooled into thinking they're close to Proc Marketfit because of the zero interest rate environment and the zero interest rate environment is gone. And they actually much further than they thought. The key for me is Proc Marketfit isn't a binary thing. Like, you don't have product market fit or not have product market fit. You have degrees of product market fit, right? And how easily people buy your things and that shows up in stats like CactLTV or whatnot, it's not like you have it or you don't.

39:55So I'll give you like a weird big company example, but it's really interesting. You think of snowflake, data warehouse. So I'm the CTO of a company. What's happening if you look at the snowflake numbers, it appears that their current customers rate of usage of snowflake, like the growth of what an existing customer would spend on snowflake isn't going up nearly as much as before. So last year before like if you were like average customer of snowflake that gave him a hundred dollars in year one They made give them maybe a hundred and thirty dollars in year two just existing usage no new sales just including usage But now that seems to be going up less at least that's what the like numbers look like what's happening What's happening what like gong is another example where I think for gong We like them because they make the team more efficient But we're also aren't hiring more salespeople and their model is seed based And so they're not gonna see as much intrinsic growth from all these companies not hiring as many salespeople Let's go back to the snowflakes.

40:44What's happening? Okay, here's what's happening before when my team was like, we want to put more data in snowflake. I was like, hmm, zero interest rate. So funding is free. Like literally putting more data in snowflake. I paid them, but there's zero interest rate on what I put in there. So it's easy to raise funds again. So I'm like, well, if in the future, I can generate return on this data that is above zero percent. It is worth it for me to pay for the cost of the data going in the data warehouse. Now suddenly I wake up and I'm like, well, the hurdle rate is 8 percent and I'm trying to get to cash with positive as quickly as possible.

41:15And I'm like, yo people, like, first, no more data into snowflake until you're really sure that you can generate much more value relative to the cost in the next, you know, 12 to 18 months. And number two, what are we storing in snowflake where we have really low odds of making more value out of it? You know, we're like, okay, we're going to reduce how much data we store there. Because the hurdle rate and the amount of value I think I can get from data products is just higher. Like the hurdle rate is higher. The value I need to show is higher. And so the product market fit for snowflake as a data warehouse product, that's the same binary.

41:45But the value of a data warehouse in industry just went down because the value that I need to generate from that data needs to be higher for me to be willing to spend that cost. And so everywhere right now in tech, what's happening is products that were top three value creation for businesses are now fifth on the list or seventh on the list. These companies that thought they had product market fit, there's a structural thing that's changed that's made their product market fit less. And in many cases less so that it's not a growth business anymore. And I think people are not thinking through it, they're thinking like, oh, it's a little harder to sell until there's more money in the market or until these companies start growing.

42:20And I'm like, no, actually, like, I'll still spend less on my data warehouse when I'm a cash flow positive because I need to get more value out of that data for it to be worth it for me to store it. I think it's a more fundamental change in how people look at returns. Would you be a long -ware short on stuff like? I don't know what their stock price is right now. I think Steve Billion. 60 billion? I'm short. Look, I'm a long term SNP 500 investor. Steve, you've kind of differentiated opinions. You said another differentiated one to me before, which is I don't have a mental model for generative AI, and that is a problem, but neither do you.

42:54But you wouldn't even buy it. I mean, what is a great product or engineering leader, or great business leader, right? You need clarity on what is possible and what is not possible. Like, what can you build with software? What can you not build with software? So what's really interesting about Genie I, it makes really cool demos, but I actually have a lot of trouble answering the question like where can we build great products with it, and where can't we? And I used to have a very good model of what you could do with software and to a certain extent hardware. You know, I understand what computers are good at doing with their bad at doing.

43:22Now suddenly with Genie I, there's a bunch of stuff they used to not be able to do, like deal with ambiguous human language or create new images based on words, that they're really good at doing. I just don't know quite what really good is like I don't have a sense for what they can or can't do there Look, that's my problem right and I need to develop that intuition because if I don't develop it I'll be out of a job like pretty quickly and I think that's true of a lot of people in tech like you really need to understand The bounds of technologies so that you can know what business problems you can answer with with software But I think everyone's in this situation.

43:53It's a work. We're in the early stages of it And it's so it's okay not to know was been the biggest career that you've made that didn't work out like product wise and a thing. But when I was a Dropbox, I was responsible internally for trying to build a Slack -like product. Basically, a product that would allow communication on top of the documents that are in Dropbox. We really, really didn't figure that out. That was big flop. I think we were too far from the customers. There's a ton of stuff in terms of early product that I got way wrong on that one. I learned a ton from it. JD, I love this.

44:24I could told you all day, which is wonderful for me, but I'm a VC, so we both figured that I have more time. I would have been media entrepreneur. You're a media entrepreneur, I thought. But I wouldn't finish for the quickfire on my friends. So I say, I shall stay with you and give me your immediate thoughts. Does that sound okay? It sounds okay. So tell me, you're a prolific angel as well. What's been your biggest lesson from real angel investments? It's really hard to predict at angel stage who's going to be successful. And I've been like renewed belief in humanity. When I see founders, then I'm like, ah, the idea is good, but I'm not sure this founder can do it.

44:57And then you see the founder change into like a unicorn of a human. I think an ability to predict people's ability to grow has been like a real, you know, eye opener If you could put all of your money in one company that you're investing, what would it be? I think it's these two. It's Rupa Health and Atlas. I love the mission the founders are awesome They like power through anything and I don't do it for the money I do it for like I think they have successful outcomes But I do it for how interesting the founder and the product is and I think those two are doing very cool things What's the biggest piece of startup advice to you here?

45:27There's title BS and why? The thing you should realize about all advice and the most important thing is does the fact pattern of the advice Match up with the fact pattern of your situation and often it doesn't and so what you take from the advice is like the delta between the advice and where you're at Which seed fund June Vastin if you could already invest first round I like those guys and I think they really care about helping founders get to product market fit They will sit and spend more time with the founders to help them get there than other funds that I know So that's why I have a ton of respect for them.

45:57If you can invest in a series A firm, which would it be? Wait, was he one of us upon a time you could just say benchmarked to that? But if hard for me to say not, it's not Sequoia. You know, even like, you know, Brazil and stuff, it's like, Oh, new bank, of course new bank is with Sequoia. Like, while we were all doing other stuff, you know, they're out securing that stuff. So, yeah, their records has been really strong. What do you know now that you wish you'd known when you started? This is piece of advice, which I think is good advice, that I give to people at larger companies, Which is like the best thing to work on is the thing that has impact for the business But that leadership doesn't care about you can unpack that piece of advice for a while if you're leader You can unpack that piece of advice and ask yourself sometimes what the best things for your business are happening Where you're not looking and what does that say about you as a leader and I think for employees It tells them like the North Star is having impact and having impact that any business is really hard because there's all these forces I get in the way like politics and internal incentives and whatnot But ultimately the impact is what matters.

46:52You got to find a way to work on something that allows you to have it. Final one, what would you most likely be remembered for as a leader? I hope that people who've worked for me around my teams or with me feel they did the best work of their life up to that point while they were working with me. If I could achieve that, that would make me very proud. JD, I've loved doing this. As you saw, you prepped for the schedule. I didn't state to it so well. But this has been a joy. So thank you so much, my friend. Yeah, thank you so much, it was great to chat and look forward to hearing the episode. I mean, that was awesome.

47:22What a broad and wide -ranging discussion that was. I want to say thank you to JD for being so open and so willing to move on schedule there. If you'd like to see more from us, of course you can on YouTube by searching for 20VC. But before we leave you today, when I talk about using Coda, it's not lip service or because it's in the ad copy. It's because I'm a believer. However, recently, Coda is the dock that brings it all together by putting data in one centralized location, regardless of format, so it eliminates road blocks that can stop your team in their tracks. With Coda, your team can operate on the same information and collaborate in one place.

47:57To get projects across the finish line faster, with Coda, you'll never ask, where are the latest project updates? Anyone know where the performance stats are? Coda is here for whatever you need, just like they did for me. Coda has made things so much better for me. They never disappoint sign up today at coder .io slash 20 VC and get a thousand dollars start up credit on your first statement. That's coder c o d a .io slash 20 VC to sign up and get a start up credit of a thousand dollars. And to be here of amazing tools we cannot live without travel and expense and never associated with cost savings.

48:34But now you can reduce costs up to 30 % and actually reward your employees. How do you do this? Well, Navan rewards your employees with personal travel credit every time they save their company money when booking business travel under company policy. Does that sound too good to be true? Navan is so confident you'll move to their game changing all in one travel, corporate card and he spends super app that they'll give you a $250 in personal travel credit just for taking a quick demo. Check them out now at navan .com forward slash 20VC and last but by no means least, we need to talk cash. As of 29th June, you can get 5 .5 % yield on your cash with 26 -week treasury bills.

49:16But buying treasury bills is not that easy and you have to navigate a website that looks like it was made before I was born. Enter public .com. Their treasury accounts make it simple to earn a high yield on your cash and it takes 20 seconds. Here's how it works. sign up at public .com, easily purchased 26 -week treasury bills that automatically roll over at maturity for a compounding yield. Plus, there are no minimum hold periods. You can access your cash at any time, with the flexibility of a bank account, of course, to receive the full -guaranteed yield. Of course, to receive the full -guaranteed yield, you do have to hold a maturity, but here's the thing.

49:53These are T -bills, which means your investment has the complete back of the US government, making one of the safest places to park your cash. Go to public .com forward slash 20 VC to lock in a historic 5 .4 % yield on your cash. As always I so appreciate all your support and stay tuned for an incredible episode coming on Monday with Adam Messeri, CEO and Instagram.