Secrets You Can Learn From Your Customers

0:00And some point during this coffee session, the guy was like, hey. Oh, you want my notes? You want a super note? Would you like a gold mine? Yeah. All of my thoughts, all of my... Everything.

0:14Hello, this is Michael Seibel with Thoughts in Caldwell. And today we want to talk about our secret for learning as much as possible from your early stage customers. One of the things that we have to fight a lot for these founders, early stage founders, is we had to fight, is this idea that when we started the company, we understand the problem really well that we're trying to solve. We understand the customer really well. We understand the solution really well. Yeah, we have it all figured out, right? Day one, we nailed it. We have our next 10-year plan all lined up. And why would you start a company if you didn't have the plan?

0:49Like, if you didn't know, right? It's true. Overconfident foolishness is a key part of doing anything ambitious in life. So I do. You're right. You got to love that. You got to start there. and then immediately switch. Maybe we don't know anything. Is that possible? But you only switch after you burn the bridge behind you. Yeah, but you can't quit. If you're far enough along, quitting's not an option before you realize you don't actually know too much. And then at that point, you have to learn. And one of the things that we've seen, and we'll give some examples today, is that the fastest way to learn what you need to know, both about the problem and how to solve it, is to care about your customers.

1:28right? If you care about your customers and then as a result you spend time with your customers, you can really learn what their problems are and how to solve them so much faster. You know one example and we talked about Airbnb a lot but one example that came up when they most recently spoke to the bash that really clicked in my mind was they retold a story about how they were emailing their hosts and they saw their hosts had horrible photographs on Airbnb and they knew their hosts were listing their properties on other sites and they had horrible photos there too. And they said, okay, we're just going to help them get better photos, right?

2:04We're just going to help them get better photos. We're going to email them. We're going to go to their homes. We're going to give them better photos. And I think what's interesting about that was that they knew that those hosts were going to use those photos in other places, right? They sure did. They knew that like maybe their company was going to be dead in three months, right? And they knew they were kind of losing money on the deal. Yeah, yeah, exactly. Exactly. They 100 % losing money on the deal. Didn't pencil out. Yeah, didn't pencil out. But they did it anyways. And they had empathy for the users.

2:35And they're like, you know, those photos suck. This is something we can solve for them. And it's kind of human nature that if you do something nice for someone, they'll appreciate it. They remember it. They kind of help you. Trust. Like you establish some trust when you break down the barriers between yourself and the folks you're trying to serve and do something nice for them. Who knew? something valuable who knew and they didn't they weren't like here's your here's your invoice yeah no no no no um and i think what was interesting was that when joe tells this story he talks about one host who after they took all the photos and they arranged the lights the right way and were like they showed them photos like oh the place looks great the host was like hey do you want to sit down for coffee and it was so funny because that was the moment in the story where i was like a lot of founders would have said no yeah a lot of founders would have been like I have someone else on the list.

3:25I'm just doing this to try to make my website better. I don't really like you. I'm actually kind of pissed that like you have shitty photos on my site. So like I got what I need. I'm getting out of here. And Joe actually cared about his users. And Joe was like, sure. And as he tells that story, he learned that that host had been renting out his apartment for I think 10 years. And throughout the process of learning how to do it, he had taken notes in this notebook. And some point during this coffee session, the guy was like, hey, oh, you want my notes? Do you want my notes on being a host for the last 10 years?

4:02It's like, would you like a gold mine? Yeah. All of my thoughts, all of my everything. And it was yeah. And what was so funny was that that whole process, that whole thing of learning what he probably couldn't have learned if he had talked to a hundred hosts casually. He got by caring about one guest. Those moments never happen. That learning never happens if you don't care. Yeah. We always, we talk about these guys a lot, but you know something that you can't fake that they always do is they remember the names and the life stories of their first customers. Like when they talk about the original Airbnb, they weren't like, yeah, we hid behind our keyboards and we bought some Facebook ads.

4:45We put out a landing page and we spammed some people and they signed up and you know we scraped vrpo no yeah when they tell the story it's a story about people yes and they they know all their names and they they keep in touch with all their original hosts and the people that stayed with them yes to this day to this day and they just cared more yeah and you can't fake that in many ways they didn't have many other advantages noob They didn't have any other advantages. So that's Airbnb. Talking before, you were saying that the Brex folks have figured this out a little bit too. What, tell their story.

5:24We've spoken about the Brex pivot in various other contexts. And so folks know they started with an idea that was like, hey, VR is the future. I guess let's make some VR headsets. Hypey scene-ster idea of the mind. Yes. And again, it makes sense. They had this sense that that was what a startup should be. is whenever the current zeitgeist of what's popular. And the issue was, you know, I don't know where to begin. They didn't know a ton about that. They were programmers, but they had only worked on fintech stuff before. They didn't really understand the use cases. They weren't really sure why the other products weren't good enough.

5:57Like it was just basically DOA. It's a complete mess. It was a mess. Yes. And then they tried a couple of ideas. Again, you know the story. Yep. But at the end of the day, they really understood other founders, other people in the YC batch. Yeah. And once they got the idea for Brex, it was very clear what to do next, which was to talk to the people all around them in YC, literally in this building we're in right now. Yeah. And ask them stuff like, oh, do you have a credit card? Oh, you don't. Cool. Do you want to use our thing? Okay. And then they were able to spend so much time with these customers, understanding the complexities of what they're trying to do, they could very quickly ship the product.

6:32And again, let me give you another example for them is a lot of folks that have companies in different countries or employees in different countries. There's all this complexity that you get if you're not American and your company's not American and your employees aren't in the United States. Yes. Right? Yes. And these guys are building all the software now to this day, which involves really going deep and caring about all those edge cases. Yeah. And it's because they employ people. What's funny is they can be their own guinea pig on this stuff. Yes. There's no way you could fake that. If they weren't founders, if they hadn't gone through this themselves, it'd be much harder to hire some PM at a big company to build all these solutions.

7:10What I love about this story is that while they were in the YC batch and they were asking people, do you need this? They were finding people who were getting screwed, right? It was like, oh, you're under 25. Yes. You can't get a credit. Sorry. No can do. Yeah. There's no like fill out extra forms. It's like completely getting screwed. Oh, you're not from America. That's a no. Sorry. You don't have a credit. You can't get, and so like what I loved about it was that their product didn't even have to be amazing to start because the alternative was nothing. Yeah. When you're competing with literally nothing.

7:44Oh, and it's like, it's like the perfect example of the big company, not caring. It's like, I don't care so much that you just can't use my product at all. And like, all they had to do was care more than that. Right. More than no, like, we'll figure out how to make it work for you. And I think that it always just comes back to this, like, those founders in the batch loved those guys. Yeah. Well, their customers were their friends. They were people they knew. Yes. And they could relate to them. They could talk to them. They would go out to dinner with them. And they genuinely knew the stories of their customers and cared.

8:18So I would say the last story on this was a story I experienced at Justin TV and Twitch. And I would say, to be honest, Ray, we experienced both sides of this. in the early part of the story, we had a very troubled relationship with our users. On one hand, they were streaming content on our site and we had a lot of traffic and we were able to monetize traffic a little bit. But on the other hand, they were streaming content they didn't have the rights to. They didn't have the rights to. It was like soccer. Soccer, sports, movies, TV. Boxing. Boxing was big. UFC. Hi, guys. They liked us. It was very popular.

8:53Very popular. And they were creating problems for us. Like we could get sued. We were getting sued, like all kinds of issues. We had a really complicated relationship with our customers. And even just the UGC content, right? Or people in chat saying bad things, right? It was like, like for a lot of the time, they only said nice things. No, no. That's so, no. Sometimes you say bad things in chat. And so for a lot of the time, we had this really complicated relationship with our users. And then I think that really changed when Emmett and Kevin started talking to streamers, right? The way the story goes is that, you know, some people started streaming StarCraft 2.

9:25Emmett was a big StarCraft fan. And he just loved watching this stuff. And he started talking to the streamers and like not sending a mass email to all streamers. Do you like streaming video games? Yeah, do you like streamer 257? Like, you know, like weird, like, yeah. He literally reached out one by one with Kevin. And if you're a streamer at Justin TV at this point, Justin TV is like five years old. And you're on a phone call with like the CEO and the COO. That's pretty cool, right? And they care about your Starcraft channel? Yes, your Starcraft channel. What did they play? Were they like, is Emmett a Zerg guy?

10:03Here's the problem. Is he a Protoss guy? Emmett could kill me with every race in Starcraft. So I don't even know his favorite. We should ask him. Yes, I wanted like a Zergling rush guy. Okay. Emmett figured out in four seconds and then just had infinite ways. I would play Taron back in the day. That's really. Yeah, Siege Tank. I don't know. Anyway, carry on with the story. Sorry, sorry, yes. So Emmett and Kevin get on the phone with these streamers and basically just asking them what do they need. And I think that what was funny is that the streamers tested them a little bit. The first things they said were things like, well, can you let me stream in higher resolution, right?

10:36And, you know, it was funny because talking to Emmett and Kevin afterwards was like, yes, in fact, that's one of the easiest things. Yeah, let me break this down. They thought that people would be asking for all this really hard stuff. And what they asked for was embarrassing because it was so obvious and easy to implement. So easy. It's just that they never bothered to ask. Never bothered to ask. And actually, it was even more insidious than that. For these users that they had a complicated relationship with, increasing the bit rate of their streams increased our costs. That was kind of a negative feedback loop.

11:11But for these folks, there was no issue with their content. It was perfectly fine. There were no rights issues and so on and so forth. And hilariously, because we had a really strong technical team and tech co-founders, we built around video system changing the bit rate was like a number like yeah it was probably setting spy out and so bam we had that feedback loop of like they asked for something we call them two days later we built it oh mind blown and then after a couple other conversations they started teasing this idea is like can you help us make money and once again we kevin emmer like not a lot of money we are barely alive so like how much were you going to make in their list like any money and once again eminem was like really any money like and they would do the math on some channel and be like well if we split the ad revenue with you on this channel we could send you a check for 20 a month and the people the stream was like that's amazing and it was like really that's that's amazing okay well you know and i remember back in the day like kevin would handwrite and mail the checks.

12:19And so to me, it was just like the third example of putting yourself out there five years in, not in the beginning, five years in, caring about that customer, asking what they want. And then you start learning, oh crap, the core learning of Twitch was if you could help these streamers make money and they could quit their job and stream the content that they love, they will make stuff that millions of people want to watch, right? That was the core learning and the only reason we accomplished it was because emmet and kevin called them and gave yeah because think about it that story could have been they asked the pm to go do a report exactly right go do a survey to from your data science team or you you have you asked your investors to go do a report go do some data science like think about the million different ways they could have not personally cared enough to get on the call.

13:12Yes. And everyone around them would have been okay with those. Yeah. Those all sound more professional, right? Yeah. Get a real report, you know? Yeah. And so I think what's interesting about all three of these stories is that they all start with just caring, just giving a shit, right? About the people using your product or wanting to use your product or having a problem. And so much value was created. So much learning happened so quickly. And we see so many founders that are just flailing, putting so much effort and not getting results. Yeah. And it's like, if they were just doing these things.

13:46Yeah. And it's not a question of money. I think a lot of folks think you need more money to get these insights. And again, I think what we're saying is, you know, maybe less money would help getting these insights. Right. But you see what I'm saying? It's almost like money's tangential. Money's tangential. In fact, if you think about doing these things with a lot of money, that's how you get to the let's hire. Let's have many people between me and the customer. The more layers there are between, the better we'll do, the smarter, the more we'll learn, the more people we can talk to. All right. So the final takeaway here is that if you really want to accelerate your learning, care about your customers, go talk to them, go spend time with them one on one.

14:25and you'd be surprised at one, how special they'll feel, and two, when they feel special, how much they can help you learn about their problems and how to solve them. Dalton, great to see you, man. Thanks.