Benchmark's Sarah Tavel on the state of VC, AI's impact on startups & more! | E1813

0:00You know, what I think about for the last few years is, yeah, you have elements of the first bubble, just that implosion, but there just has been so much else going on. And of course, there's the zero rate environment, what effect that's had. But you have just so many other things that you've had to contend with as a founder over the last few years. That, you know, of course, it was grow, grow, grow, cash, cash, cash, but in person, not in person, having to handle so many of the kind of progressive movements that were coming along. How do you respond as a CEO in those moments? You have the Silicon Valley Bank thing that's happening.

0:47I never would have thought. I mean, it's a long list and certainly, you know, it's a resilient to be a founder. Now you have to, you've had a lot of resilience. This Week in Startups is brought to you by Miro helps take ideas from in your head to out there in the world with its ability to democratize collaboration and input. Sign up for free at miro.com slash startups. Vanta, compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC to report fast. Twist listeners can get$1 ,000 off for a limited time at vanta.com slash twist.

1:34and Mercury, 90 % of startups fail. Just 10 out of every 100 make it. Mercury exists to close that gap, helping companies succeed with banking and credit cards engineered for the startup journey. Join over 100 ,000 companies banking with Mercury at mercury.com. All right, everybody, we've been crushing it with guests during This Week in Startups All-Star Summer. So many amazing guests. that it's spilling into September. That's right. Your summer's not over. Look at this lineup of Murderer's Row. Rich from Zillow, Nikesh from Palo Alto Networks, Dave from MongoDB, Scott from Atlassian, Ryan from Qualtrics, Dharmesh from HubSpot, all the greats.

2:21And, you know, one of the great guests we've had on doesn't like to do podcasts. She likes to work. But she's quietly built up a little sub-stack audience. And, you know, like my my bestie bill girley she doesn't write often but when she does it's very much worth your attention uh so go ahead before we do anything here search for sarah tavel t-a-v-e-l sub stack and put your email in especially if you're a founder because you're going to want to read what she has to say because she's let's just put it out there she's brilliant uh she was the first product manager of pinterest uh and i i guess you left graylock to join pinterest and then you went on to join benchmark because let's be honest the economics at benchmark are equal and other venture firms uh they make you work for decades to to get to the top of the hill so welcome back second time show guest sarah tap always a pleasure thanks for having me little intro there and then my sub stack's new so i'm like scraping my way so i appreciate you uh doing a shout out there trust me i know how to get guests back on the program i get to a thousand founders signing up that's a good start it's a good start i'll send you a thank you note the thank you note is just promising to come on every year or two uh and i guess the last time you were on we were in the studio so it was before covid way back when it was a world ago um and so and you had just joined i think um you were on february 2020 oh my god you were on that what oh my god it was like the week or two before wow uh covet hit so it was when people just stopped shaking hands just for uh oh this is where we had the controversy where mark andreason put on his door no handshakes please no handshakes please and then everybody in the mainstream media said he's hysterical lunatic and then they told everybody to stay in for two years the world is insane.

4:20That was such a different time. It's wild to think. I think a lot about founders who have gone through those last few years. Is there a time in the modern internet era where we've had a more thrashy, crazy time to be a founder? The only two you could ever put up against that would be the dot-com bust yeah and uh the great financial crisis which as great as it was was kind of like that happened on wall street and in housing so it was kind of like a bomb that went off that didn't hit us all that directly we just got the aftershocks right so those are the only two yeah the the first you know what i think about for the last few years is yeah you have elements of the kind of first bubble, just that implosion.

5:13But there just has been so much else going on. Of course, there's the zero rate environment, what effect that's had. But you have just so many other things that you've had to contend with as a founder over the last few years that, you know, of course, it was grow, grow, grow, cash, cash, cash, but in person, not in person, having to handle so many of the kind of progressive movements that were coming along. How do you respond as a CEO in those moments? You have the Silicon Valley Bank thing that's happening i never would have thought i mean it's it's a long list and certainly you know it's a resilient to be a founder now you have to you've had a lot of resilience and if you look at all four of the ones you rattled off the top of your head and man that's a great summary you know sometimes you just as a founder or a capital allocator like we do now um you just assume it's going to be hard but each one of those is like a grenade being thrown into the lobby of building like okay now we've got uh silicon valley banks going under we don't know if our cash is going to be there on monday yeah everybody run around all 72 hours you know doing caps all caps lock tweets number two okay it's covid your business is either airbnb and it's turned off or your door dash and it's went 10x and you can't deliver all the food then uh you got a bunch of insane people inside your company that are putting a gun to the founder's head and telling them whatever the social movement of the day is we'd like you to alienate half of our customers yes for the next six months and then your employees yeah your employees it's madness and then oh yeah by the way um we don't want to come back to work uh and i'm probably working two jobs right i just saw that the other day somebody was on twitter and they found out their employee who they hired away from another company that they didn't actually hire them away from that company they're still working i've heard those stories and there's a subreddit called over employed it is now a playbook there are playbooks on how to have multiple jobs let's start with that okay and great companies be built with everybody being spread to the four corners uh or is this is something missing here, especially in the stage you and I tend to invest.

7:47Benchmark is the classic of the classic series. And investors, you're looking for a little inflection point in consumer, you're looking for domain expertise and enterprise. And that's when you like to slide in there and get your, you know, 10-15 % slice of the pie and join the board, most importantly. Can this be done at that stage or my stage when you're trying to find product market fit in the seed stage, can it be done remote? Or are we missing something by promoting this remote culture? Man, if I could go back in time, and the companies that we, you know, we invested in, I would say the founders would tell you this, if they could go back in time, and be co located instead of distributed, they would, they would do that.

8:33Obviously, there's exceptions to all rules, right? And this is certainly no rule. But I would say unless you're a really experienced manager already as a founder, most cases, the companies that we're looking at are founders, and this is, they're, they're young, they've never, they, in most cases, have never managed people before starting a company. And to do it distributed, to me is like trying to sprint with a parachute tied to your back. You know, it's just, there's so, and I get you, you get into this mindset of, I want to, I want to access the global maximum of talent. And that talent has gone everywhere.

9:16And I get that it's a real trade off. But man, in that beginning stages, especially before you've really figured out product market fit and are starting to have that momentum build, the cost of communication, collaboration, culture, you know, the intensity, I don't know about you, like, I remember, some of my favorite memories from Pinterest were the late nights or coming into the office on the weekend and like seeing your buddies there. And that just creates this intensity and identity with the company and i think more collaboration more throughput better decision making better ideas and so i i've been noticing in 2023 how many more companies i see these early founder stories where the founders live together yeah it's such an even more than way more it's having than i've ever seen yeah it's in the area i live uh the wider peninsula area san mateo-ish there are a bunch of founder homes now and founders are renting giant mansions which are cheaper on a per bedroom basis and they're just working seven days a week which by the way that's kind of what put silicon valley on the map what it takes yeah and it's it's such an interesting snapback from what we saw in 2021 as an example where it was always like two zoom screens you know two squares somebody's here somebody's there and man the the the bones that you set when you're living together or your team is co-located and that's such an important part of the culture i feel like that is like you have to it's just rare and and and special and one of the unique things that you have as a small subscale startup and to not take advantage of that in the beginning seems like uh you know that parachute yeah it's it's a wasted opportunity but you did say there's a trade-off so when you start thinking about hey we need this very specific talent and here in the united states we have record low unemployment of our lifetimes it's so it you know i have employees in canada as but one example i started a canadian company during the boom time um to hire people in canada because i found people in the u.s were turning over every 18 months you know just much faster and that canadians turned over at half the rate it's a slight discount uh but not ridiculous um but there was just much more talent available and you know what venture capital jobs are available in canada none you know like so if you're hiring analysts yeah it worked out pretty well but now i find myself longing for more in person.

12:08Founders always ask me for pitch deck punch ups and how to present their startup in a better way. Well, I've got some great news. We worked with a team at Miro, the awesome whiteboarding software to create an amazing pitch deck template for founders. You can see it if you're watching the video right now, or you can just go search for it, go to Miro.com slash Miroverse and search for pitch deck, you'll find it immediately. And this pitch deck will help you go from zero to VC ready. Our founder university participants, they love using this template, it starts them on second or third base. And if you're hybrid or fully remote, Miro is incredibly useful to you.

12:44It's like an old school in person whiteboarding session, but distributed and asynchronous. So you can work on your time schedule. Miro let you brainstorm ideas and collaborate on projects from anywhere in the world, whether you're in the Adirondacks, or you're in Cabo, or you're skiing in Lake Tahoe. When you think about Miro think zero to one but faster and Miro is so much more than a simple digital whiteboard your team can collaborate on planning research design and feedback cycles now remember faster inputs equals faster outcomes and velocity is how startup wins we look for product velocity in all of our startups so to access our new Miroverse template and thousands of others sign up today for a free Miro account at Miro M-I-R-O dot com slash startups again M-I-R-O dot com slash startups miro.com slash startups is the firm you guys had a great office in the city at one point i don't know where benchmark is these days um yes are you and you were famous for the i think it was monday or tuesday night dinners you would do these dinners as a team it's monday night dinners at this like weird table it's the triangular table for five tell us about those dinners and uh are they back?

13:54We've been doing, you know, we, I don't remember when we started coming back in person after shelter in place, but we were pretty eager to come back. You know, we just felt, you just felt the difference of Monday, you know, team of six people and what happens when you're all on Zoom versus the, you know, the, the, it's kind of like being only being able to see two colors versus seeing all the colors that happen when you're when you're in person so we were pretty quick to come back as a partnership on monday on mondays and then the thing that was slower was bringing the dinners back um and the dinners you know one of the things that uh i think is a real cultural tenant of benchmark is that we're just deeply curious people uh and we i think also just really like being together and having, you know, some, you know, good wine, good, good food together.

14:55And so one of the things that we do both to nurture that curiosity that we all have, and then just to have fun together and have a good time is having these guests come on Mondays. It's one of the things that Bill actually brought to Benchmark, I think inspired by benjamin franklin and how benjamin franklin also nurtured his own curiosity of bringing in people who are experts in whatever you know a domain that he was curious about at the time and and so for us it's like a it's a pretty broad spectrum of people i won't name drop but uh it's you know it's one of the things i i most look forward to and we try to do it almost every monday yeah i won't name drop names i know that have been there either but you know an author a politician a retired politician a former entrepreneur a scientist it could be anybody doing something very interesting in the world and i think the great investments you know i'm curious how you think about outliers they tend not to fit in a box they tend to be multidisciplinary the founders tend to be difficult cantankerous uh you know i'm talking about the successful ones um you know driven uh mission driven driven because of whatever happened whatever trauma they went through in their childhood chip on their shoulder yes whatever chip they happen to have um but there is something about when you learn about other disciplines and you see innovation happen in other verticals that that really can help you in your vertical maybe talk a little bit about that kind of multidisciplinary cross-disciplinary mindset it's um it's it's i don't have you read range by david epstein yeah i mean it's incredible yeah it's you know and it's such by the way it's it's such a great example of one of those books that you know i forget who read it first whether it was peter bill or eric or whoever it was but someone read it and comes to our group and says oh my god you have to read this it's so interesting and we're all You know, it's just curious and it's, you know, it's part of the fun thinking outside the box that happens is being able to go down whatever rabbit hole or pull whatever thread you might have from whatever you're learning or been curious about recently.

17:20And I love that book. I highly recommend it to people because the thesis he explores, it was actually catalyzed by a debate he was doing with Malcolm Gladwell on the 10 ,000 hours specialization, Tiger Woods studying, playing golf from when he was four years old and becoming the great that he is today versus, I think it was Nadal? No, it was the Swedish. Andre Agassi was it? No, not Andre Agassi. It was somebody who had played multiple sports and came to it later. Yeah, well, he has, I'm terrible for forgetting his name. He's one of the greats. I just, I'm not a sports person, but he, his, he ended up playing tennis.

18:09Actually, his parents were tennis coaches, but what they told him to do was first to study, to play all these sports. you know they didn't let him specialize early and so he did he did a range of sports and then eventually yeah federer thank you it was federer you know how i know that how i i hate to tell people my secrets i literally just typed into chat gpt4 which we're going to talk about yeah i for the second half of this who are the athletes in the book range and it literally put it in a table roger federer tiger woods vince van gogh jack nicholas Perfect. Perfect. Great. It'll be a great segue.

18:49But so he did a range and then he specialized. And when David Epstein studied these two opposing models, what he found was that there was actually far more success going after the breadth and then specializing than just specializing. But then, you know, you kind of start to expand that, you know, thinking about teams and teams, you know, that are all specialists aren't as good at solving problems as like a team of people from different disciplines or perspectives. And similarly, it's a type of thing that like, I remember meeting a CFO candidate, and I loved that he hadn't been a SAS CFO or VP of finance his entire career.

19:33He had done some e-commerce. He had done a consumption model company, a SaaS model. And when you have that breadth of experience, what ends up happening is that your creative problem solving is better. You're not a hammer looking for a nail. You see things in a way that other people don't see things. And it's just the ingredients that you need. We think about it a lot for our partnership construction, too, of just making sure we're always having people from different areas, perspectives coming in. Victor, our most recent addition, being a great example of that. Why is he a great example of it?

20:16Well, he was the CEO and founder of an incredible company in the gaming space called Wildlife. And he, we actually, we were investors in it. So he was a benchmark funded CEO from Brazil natively and built this just incredible business. And we both, you know, we recognize, you know, Eric Vishria is another partner at Benchmark who had been a founder CEO. You know, I obviously spent a few years doing real work at Pinterest, but we felt like we wanted somebody else in the mix who had, you know, had that experience, and then also had this, you know, a different perspective, both as someone, you know, he's natively from Brazil, having that more kind of global point of view, but then very importantly, also building a type of company that none of us really had deep exposure to.

21:19And, and then he has these, you know, incredible relationships that he's built over the years with so many incredible founders the brex founders as an example whom he's on the on the board of brex and so anyway just a trifecta right there different way you got a continent you got a category in gaming uh and you got a skill set being a founder and let's double click on that last one seems like the industry is um and i listen i'm a beneficiary of this i was a founder um and a journalist so i kind of got two of the things that people look for in vcs these days um it used to be analysts like girly uh lifelong career venture capitalist fred wilson that was how vc worked you got a bunch of mbas you got a bunch of analysts and that seemed to be really good but then the industry pivoted and said hey journalists seem to ask really good questions they're very curious people let's give a couple slots to them and then now hey are you um a ceo founder there may be a little bit of a divergence like did you work at a successful company and because maybe vc got a little too big that doesn't seem like just because you happen to be at uber or happen to be at pinterest or whatever like what did you actually do there you know like if you're chamath and you grew it from 40 million to 400 million at facebook okay you got the bona fides but it did seem like we just started taking random people from logos well i'll give a little twist on that which is that you know when you are an operator, the parallel of an investment decision is the company that you join.

22:53And so it's one thing to be at a company and I just, oh, I got lucky. I was just there and then it happened around me. And I think there's a lot of instances where that does happen or the company is already an inevitability when someone joins. But then I think about my partner, Matt Kohler, whom was first five employees at LinkedIn, and then made a very intentional decision to leave LinkedIn and join Facebook. For me, with Pinterest, obviously invested at the Series A, and then I was just so excited about the company. It was four people when we invested. And just so excited about what was possible there that I couldn't imagine a world where I didn't throw my hat into the ring and beg for a job basically and so there's an intentionality i think that you see for some people uh in the early like deciding to commit to a company as an operator that in a way is an investment is is a sign of an investment decision it is you are placing five years of your life i mean four if we just are totally cutthroat about it and think about like a stock vesting you're trading four years of your life and you may have 30 productive years uh depending on when you start taking your career seriously and when you decide to retire so hey listen you're talking about 15 of your career you're making a bet yes cheryl sandberg made a bet on google and then she made a bet on facebook and you know she had that famous quote um it doesn't matter what seat yeah yeah like if there's a rocket ship take a seat if you're a sass or services company that stores customer data in the cloud, then you need to be SOC 2 compliant.

24:44You knew that from a third party and you need that third party to close big deals. And if you want to get compliant easier and faster, you need to use Vanta. V-A-N-T-A. Vanta makes it so easy for you to get and renew your SOC 2. On average, Vanta customers are SOC 2 compliant in just two to four weeks. Prepare that to three to five months without Vanta. And Vanta can save you hundreds of hours of manual work and up to 85 % of compliance costs. This is a total no brainer. And Vanta does more than just SOC 2 compliance. They also automate up to 90 % compliance for GDPR, HIPAA and more. You can't afford to lose out on major customers.

25:22We all know that. Listen, it's a hard year. Last year was hard. You can't lose those major customers because you don't have your compliance dialed in. Just work with Vanta. Get your compliance automated and tight and tight is right lock down those big deals. Here's the best part Vant is going to give you$1 ,000 off that's 10 hundies get$1 ,000 off at Vanta.com slash twist that's Vanta.com slash twist for$1 ,000 off your sock too. And I love your framing of that's first time I've ever considered that framing of it is an investment decision and and hey, four years of your life. Yeah, if it doesn't go much stronger, you know, a lot of operators that talk to me about getting into investing and then their seed investing and our angel investing rather and there's it's a reflection of something like your network and sourcing but ultimately the strongest reflection of the type of investing we do which is one or two deeply committed investments every year there's that the closest parallel to that is the company you choose to join and when and that's one or two per partner per year correct yeah so and there's five partners in benchmark or six there's six now in victor so you're talking about one or two means 1.5 so you're talking about the firm does nine ten investments per year one every month or you know one every six weeks or so so it really is done incredibly thoughtfully um and you're joining the board most people excuse me in the industry uh think the deal flow is destiny obviously i think that's a big part of it but you are saying here selection is equally important or more important than deal flow i don't think in those terms because it's it's um there's two things at play or rather i would think of it this way which is like i'm a big believer every strength has a corresponding weakness and vice versa and so everything has trade-offs it's kind of like, you know, the employees who complain about a company feeling like a show internally, it's because it's decentralized, and there's all this redundancy and all these things.

27:35But the strength of that, you can see the weakness, but the strength of that is that the company is moving really quickly and scaling really quickly with revenue and everything else. And so there's trade-offs. For benchmark, the strength, I believe, in our model is that we are, you know, we're a team of equal partners. And all we want is to find the, you know, the founders that will be those generational founders, and then partner with them in that shoulder-to-shoulder work that, you know, means that we're not delegating any part of the what we consider to be the core work of a board member to an internal team of consultants to a platform team.

28:23So we have, you know, deep commitment, truth seeking as a partnership, and all alignment that once we invest in a company, we all are empowered and want that company equally to be successful. So you have the full benchmark partnership behind you. The corresponding weakness of that is that we don't have a team of dozens of junior people who are reaching out to founders, you know. And so my fear always is that a founder doesn't hear from us, you know, and they consider they just assume that the fact that no person from Benchmark has reached out to them means we're not interested in them. when really it's there's there's a constraint that we naturally have with our model that just means that we don't have that you know that that army of people who are doing that work reaching out you know nurturing all the seed relationships and it's a it's a paranoia I have and you know I'm all you know that's why we're always you know I'm writing or doing podcasts or reaching out to friends or developing notes, hoping, cold DMing people as much as we can, but at the end of the day, we have this constraint and we have to hope that the product that we do have, which is that deep commitment where we're not delegating any part of that job, means that when that really ambitious founder who wants the best partner that they can have makes sure to find an introduction to us or you know a a and some way of getting to us and by the way i'm sarah benchmark.com like so i think sometimes people think that oh you know it's well go ahead well no i was gonna say you know a lot of vcs get high on their own supply yes this is when i know that a vc is about to crash and they should retire is when they start writing about how you should contact me here are the rules for contacting me and he's like uh hey dummy we're in a service business stop complaining about your email your dms uh that's the job you have to live because you don't have an army of people screening your inbound like i do or you don't have an army of people like uh listen indrescent horowitz you know it's the platform company you might you might not have mentioned their name but i will you know they got 50 recruiters 30 recruiters sitting there doing in the recruiting job where you know hey benchmarks feeling is if and i've talked to bill gurley about this if bill gurley's email me you know any cfos for a company like this who do you think might be great i mean i've gotten 50 emails over the years what do you think of this person i see you're connected to them on linkedin that's bill gurley yes girl he's rich you don't need to do that but then you know when he brings that cfo or that person chief product officer you know whatever vp avenge to that founder hey yeah i check with jake al i check with this person and that's a super that's a superpower right there yes so different different strokes for different folks but you in your uh because i was just down the sarah tavel rabbit hole i read like all your sub stacks from this year really really worth uh checking out you know hey reach out dm's open email me if any you said in a very nice way if this sounds if this resonates with you or something like that you had a little hook that i thought was very charming uh and thoughtful talk to me about writing uh as clarity of thought and a way to find the mutants out there i i look at my podcast and uh you know that happens to be my zone and i'm a writer too but you know i look at my podcast as a way for me to be professor x you know put on cerebro and go look for mutants right uh if they're listening to the pod it's self-selected hey they want to hear us talk for an hour about the gritty details of this most people want a 15 minute interview i'm like yeah enjoy 75 minutes or don't i don't care uh but that's a way of me clarifying my thought and showing my intellectual curiosity your writing shows yours talk about getting on the horse here and trying to be disciplined about writing on a regular basis in your process yeah i mean i i'm i know i've been blogging since 2006 six.

32:41I had a, I remember blog spot. And for me, you know, especially back then, I was a year out of college starting in venture. And I probably felt at the time, if I look back on my very first blog posts, I was struggling being the only woman at my firm. It was just a brand new experience I'd never, I thought would be fine, but actually was rather intimidating in the beginning. I was, you know, 20, 21, 22. And so blogging in the beginning was a way for me to just find another outlet that was more comfortable for me. And what ended up happening is I learned two things, which is one, exactly as you said, that when you are forced to write, you, you know, you always have these ideas and they're little wisps, you know, and you have to really grab onto it and pull it all the way.

33:34and it takes work, you know, writing as you know, my, you know, I think about my hierarchy of marketplaces that I wrote that's actually on my medium where I've been writing before. It took me hundreds, like way more than 100 hours to work on that piece. And it's one of those things that I, in the beginning, I thought I knew, I remember, I put it first draft together and showed it to Bill, and he came back generously with all these notes. And you realize you don't really know something until you write it. And so, through writing it and synthesizing, I find that it puts me in more of a learning mindset, and I learn more.

34:12And then the second thing that you have is the community or the, you know, the people who for whom those pieces then resonate. And, you know, you talked about your selection bias for mutants. I hope my selection bias is always looking for learning animals, you know, people who are just, they're working on something and they're curious and they're learning and they're thinking about how to build something that's going to dominate, you know, the competition. I want those people to read something I wrote and like they want to build an enduring business, an enduring company where you're not just focused on, you know, getting to the series A and then the B and then C, but you're focused on how do I build something great for my customer work backwards from there i want those founders to read what i write and have it resonate for them and that really is three things it's curious but they also have to have some competition in them absolutely yeah and that is and then uh they have to be decade thinkers so it's really those are the three things when you gave that answer that i immediately parsed um let's take the second one i've got a competition in me i don't like to see other people succeed that's there will be blood you got a little competition in you you're a competitive person you were the head of your rugby team that's i think your avatar is you with like more paint under your eyes with dirt all over you if you're an ambitious startup you can't have an old sluggish banking service slowing you down no mercury is banking for ambitious companies and they will help your startup become the best version of itself and so many of our companies in our fund in our community are using mercury.com and they love it.

35:59Say goodbye to the friction that comes with traditional banking. Mercury understands modern UI. It's gorgeous and they move at the speed that startups do from creating an account to wiring money a few clicks. It's all it takes. And Mercury isn't just a place to hold and send money. It's software that's built to help you scale with safety and stability, whether you're a team of two or 2000. And Mercury goes beyond banking to remove the roadblocks to your success by providing you with the connections network and guidance necessary to make your ambitions real. So here's your call to action. Visit mercury.com to join more than 100 ,000 startups on Mercury, the powerful and intuitive way for ambitious companies to bank.

36:41Disclaimer, Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank and Trust. Members, FDIC. talk about competition and the i think it was ruloff who said this to me like you know there's certain people who have like a little overdrive they can put it into fifth gear six gear they can hit the afterburners and get that little extra 20 percent uh which i interpret it as that competitive spirit that that next gear um why is that so rare and how do you identify you know i find why is it so rare you've got to have a chip on your shoulder there's got to be something you know i know for me i i my hypothesis for me is that i'm the oldest of five there were four of us in four and a half years and in a way i had to compete for attention from my parents You know, and so for me, achieving was my way of getting attention.

37:45And all you know, and so that was that was what it was for me, everybody has their own thing that, that, that creates that competitive spirit. And I think there's probably a feedback loop that also happens, which is that you are successful, and it fuels it, right. And so whatever it is, like you want someone, this stuff, it's really freaking hard, right? Like building a company that endures, that is, you know, able to be eventually one of those kind of rare, iconic, independent companies. It's a relentless pursuit of excellence. And you have to be so vulnerable and admit how little you know, because you're constantly in the biggest job you've ever had.

38:38You're constantly growing, being challenged, feeling all the things that you don't know or all the mistakes you're making. It's just part of being a founder, being a CEO in particular. And you have to have a drive that's going to get you through that. mission is one of the most important drives, right? Like, just feeling so committed to the reason why you started the company in the first place and what your customer needs from you. But there's, there's another thing that I think creates that overdrive. And it's that desire to win that pushes you, you know, winning is hard, right? Like you, I was a competitive swimmer.

39:20and like man the hours that i put into the pool and like the race itself it there's there's so much discipline that comes there but it's really hard to answer your second question how do you see it i don't think people just become competitive out of nowhere i think people that are competitive have a track record of being competitive you know and so i'd seeing that it's it's um i remember when I used to interview for the analyst position at Bessemer, to be an analyst at, you know, one of these junior people, cold calling companies, you have to be persistent. And I would always ask the candidate, like, tell me a story of when you were persistent, and they would always have a story.

40:08And then I would say, tell me another one. Tell me another one. I think you have a second one. Yeah, a third one. and the same thing i could do three hours totally competitive moments in our life yes and i was i just somebody just did a retrospective of me of the silicon alley days and they're like oh we heard these four stories of your magazine or whatever and i said yeah i was deranged in my competitiveness i felt that anybody who had a win that meant i had a loss when i and it was even in categories where i had yet to build a product so there was some newsletter called at new york that was a weekly and i had the biggest magazine one of the top five magazines in new york so i'm gonna report it was booming 12 million in revenue but these guys had a weekly and they would beat me to news stories and i would stare at the ceiling if they scooped me on a story it would my teeth would grind and i went to my team and i said silicon alley daily i wanted up and running today and they're like this is in 1996 or seven and they're like what is that i'm like a daily email newsletter about technology companies and they're like hey boss we need time to do this i don't give a i want it out we're starting this week first email is going out today give me a story like that's competing with the magazine i don't care we have to destroy this company and this company was like two great journalists i was psychotic in my book and then you know my co-founders are all in now you know we're like okay we have to create this conference it's got to be the greatest one ever held it's got to be better than ted it's got to be better than everything that exists in the marketplace and you know the the three compatriots i have on that are also lunatic competitors and so it's it's either you have it or you don't and it makes people uncomfortable i know but you know that's that's the weird thing about entrepreneurship i think in 2023 versus you know i guess we're i think you're a gen xer maybe you're you're i'm on the cusp but i'm a millennial you're on the cusp right you feel more gen x than millennial to me you're i'm gonna i'm gonna take you for the gen x side and the draft take it but you know it's uncomfortable for people to talk about competition for some reason today yeah with the you know uh what if you got guys got participation trophies and all this kind of stuff like throw it in the fucking garbage it's worthless your participation trophy means nothing why is this so difficult for people you think to understand that like there's winners and losers in the world I wish I understood that.

42:38I wish I knew. It's part of this culture that if I were to reflect, just, you know, there's a reaction against capitalism. And there's, you know, this, this desire that you should be able to have your cake and eat it to, you know, success and, and, and life and, you know, and it's terrible, even, you know, these are the types of areas where we could talk about where people get canceled on Twitter, you know, like, all the time. And I remember the Stripe founders, Patrick, almost sheepishly saying like, just, you know, I had we had to work really freaking hard to make Stripe a success. I don't know another way of doing it.

43:25And I'll say, though, I meet a lot of founders now, young guys and gals that are really freaking driven and obsessed. And so I think there is, you know, a snapback. I hope there is because I don't see how people build companies that matter without that drive. I mean, the world needs somebody to create innovation, great companies to move the human species forward, you know, and competition is part of that. And it's actually a beautiful, great thing. you know there there's been great moments in cinema where people were competitive each other you know scorsese and francis for coppola and all of oliver stone all that generation they wanted to one up each other spielberg george lucas they all wanted to make the next great film we saw it in poetry authors we saw it in rock and roll like people wanted to one up each other but it's a in a healthy way it you know it doesn't always have to be deranged and sociopathic and the world must move forward.

44:31AI is this incredible innovation that I don't think any of us saw, and I'm interested in your position on this. We all knew it was hard. Oh, I predicted it all, Jason. I predicted, yeah. I mean, we all predicted it's going to play a bigger and bigger role, but did any of us predict it would do that in nine months? Because here we are, we're taping this in September of 2023, and I think ChatGPT 3.5 came out in October or November. When did it come out? Last year. Yes. It has turned the entire table over in our industry. It would be as if broadband came in 1999 and everybody had it the same year.

45:09So maybe talk a little bit about how fun this is and how much it's changing everything and every pitch and every startup. Oh, gosh. How could I synthesize that? I mean, most innovation, most new experiences, new product experiences happen. usually are preceded by some technology catalyst, right? And you talked about broadband, that's a technology catalyst. Adding the camera or the GPS to the phone that you hold is technology catalyst. And so, wow. And what's also, I think, part of what is so transformative or just why it's so disruptive right now is that it used to be, I always think of it as like a color palette, like you're a paint as a founder, an entrepreneur, you're a painter and you, you know, what happens sometimes GPS gets added to the phone or a camera gets added to the phone.

46:10And all of a sudden you have this new color with which you can, you can paint a new picture, right? What, you know, of Instagram, Uber, like those are all kind of taking advantage of new colors that you have on your palette. What happened with, with large language models is that instead of it just being a color is it's, you know, metaphorically and, and, and literally giving you the picture. And, and the, the, and it just means that, that kind of the ability of so many companies then to take advantage of this technology at the same time very quickly it's it's it's remarkable and it's the type of thing where we think about natural language right if you can have this interface to this incredible powerful model that is one that every single person can easily use and understand i mean you it's just the pure democratization of that type of technology when usually it was you know through the the the kind of interface that a developer would create for you so it is it's touching everything um yeah and it's i have a punch-up for your framing for your next subsnack the palette didn't change the canvas did explain more well if you if you think about it like what you're putting all of these experiences and these features onto the whole thing has changed now where there's a there's a whole new platform that can solve the problem and you wrote a really good blog post about like augmenting people or just solving the damn problem for them yeah and i really liked your framing of this piece this is i think your best piece of the year um amongst you know good one i give this one the uh because you went to a website for business process outsourcing and this is a very interesting device you used if you go to a bpo website these are people in india manila you know knowledge workers who cost a tenth of what the knowledge worker would cost here in the u.s a fifth whatever it is yeah with globalization and they can take something that a lawyer does that's on the low end of the spectrum and just get it done and you can outsource to them just like you might be able to amazon term in a way this new canvas that we have can just do the entire thing you don't just make the lawyer at wilson cincini 10 percent or 20 percent better at doing some litigation task at doing some ip task or trademark task you can just do the task right so maybe explain your thesis here and what you're seeing um out there on the playing field sure and there's more we can you know let's bookmark just talking a little bit more about that because there's something about you know how much of the work is the large language model doing and how do you build enduring value if you're one of these companies.

49:04The thesis, you know, when you have a technology as powerful as a large language model with so much of what we talked about before, it's really a paradigm shift. And what tends to happen when you have a paradigm shift is that the first wave of companies of applications of that paradigm are in the mental model of the prior paradigm. And usually, you know, we talk about skeuomorphism as a way of describing some of what you see at a design level. And the thing I was reflecting on is that the first wave of companies leveraging large language models, or generative AI generally, were extending the mental model that we've had for the last 25 years in application software development, which is about increasing the productivity of an employee, the team collaboration, the company, the management's ability to better manage the team.

50:06But all those things are about increasing productivity. And all those companies, they were all about increasing productivity and then charging on a per seat basis that was essentially benchmarked to the price of that employee, the cost of the employee and and your ability to move you know their productivity higher and it's why an hr startup has a harder time than a developer oriented one because the hr employee is a lower cost employee generally than the the engineer and so you have we see this manifested in per seed pricing that this model has taken off per seed pricing is like hey if you're a salesperson two thousand dollars a year for salesforce if you're a developer four thousand dollars a year for this tool.