Hard Truths about Building in the AI Era

What I've noticed in some of the best organizations is the number one consumer of tokens is the CMO.

They don't need to rely upon deputies and deputies and deputies to get actual work product.

I want to hit on some contrarian takes that you have.

Your advice, you don't actually want to be talking to customers.

I hate talking to customers.

I refuse to allow

help colleagues of mine and talk to customers.

You have this idea of criticizing in public versus in private.

High-performance machines don't have psychological safety.

They're about winning.

You're uniquely great at helping companies build world-class teams.

If a founder shows the ability early in his or her career to assess talent ruthlessly and accurately, he or she can go very far with no other abilities whatsoever.

It feels like it's never been harder to attract the best talent, really talented people.

When things are going Well, they're not happy.

The morale actually does go down when people are skating.

The single role for the CEO is offsetting that complacency.

The better you're doing, the more the CEO should push.

Today, my guest is Keith Rabois.

Keith's resume, both as an operator and investor, is absurd.

He was an early investor in Stripe, Palantir, Airbnb, YouTube, DoorDash, Ramp, and dozens of other companies.

He's part of the famous PayPal Mafia, where he was executive vice president of business development and policy.

He's also been chief operating officer at Square, VP of corporate development at LinkedIn.

He's also co-founded two companies, and he's currently managing director at Khosla Ventures.

It's safe to say that Keith is in the 99.9th percentile at identifying talent, building teams, and operating world-class companies.

Before we get into it, don't forget to check out Lenny'sProductPass.com for an incredible set of deals available exclusively to Lenny's newsletter subscribers.

With that, I bring you Keith Rabois.

Keith, thank you so much for being here and welcome to the podcast.

It's a pleasure to be with you.

Okay.

So when we were starting this recording, you told me you're doing this from an iPad, which I've never had, and you shared a crazy fact that you haven't used a computer in like years.

Talk, talk about what's going on there.

Yeah.

So, uh, when I, when I started working at Square, Jack Dorsey was running the company off an iPad.

And so I immediately converted in September 2010 and haven't looked back.

I haven't touched a computer since September 2010.

Everything I do in my life is either done from my phone, my watch, or my iPad.

What's so interesting about this as you were talking is just there's this trend of engineers starting to code from their phone, like at Boris Chernykhin and Simon Willison, these two

engineers that are like TEDx engineers, and they're just like coding from their phone, talking to AI.

And I feel like you've, you've been preparing for this for a long time.

Yeah, try to be ahead of the curve.

Jack's very good at being ahead of the curve.

If you just watch what Jack's doing and follow, you'd be in pretty good shape in technology.

And just to understand the benefit, is it just avoid distractions?

Yeah, partially distractions, partially just the flexibility.

Like taking an iPad with you anywhere is just super easy.

You know, I, some of the, some laptops have improved since then, but like the screen flexibility angles, but like just the weight, like I carry my iPad with me everywhere.

So there's no reason, there's nothing you can't perform unless maybe if you're doing heavy duty engineering, which obviously has not been my forte in life, although I may have to start.

Um, there's no reason to use a more powerful, heavier weight, less flexible machine.

Wow.

iPad maxing, Keith Rabois.

See if you got my Apple.

As long as it's an Apple product, it works.

So appropriate.

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As I was preparing for this chat, there's just like so many directions we could have gone with this.

You are so smart at so many things.

I want to focus on something that I think you're uniquely great at, which is helping companies build world-class teams.

And I want to start in particular with attracting the best talent.

And what's really interesting these days, from what I can tell, is there's just like a lot of people that are struggling to find a job.

It's taking a lot longer to find a job.

It's just, there's all these layoffs.

On the other hand, it feels like it's never been harder to attract the best talent.

There are so many amazing companies doing amazing things, so much money flying around, these $100 million offers and things.

And so from the companies that you are closest to that you see are best at attracting the best talent, what have they figured out?

What are they doing differently?

What are some creative things they do?

Well, let's start with first principles.

The most important lesson I learned when I was working at Square from my board was Vinod Khosla was on my board and he said, the team you build is the company you build.

And that adage is the most important thing when you're creating a startup.

People get distracted with the market, with customers.

With a product, with technology, ultimately it's a team.

If you have the right people, everything else will be easy.

And if you have the wrong people, everything else is going to be difficult.

So I actually learned this, Vinod distilled it, but I actually learned this back in my PayPal days.

So, you know, in the early 2000s, why was PayPal so successful?

Why were there such a gener— you know, subsequent generations of successful, interesting companies for, you know, 25 years now?

It's because Peter Thiel and Max Levchin marshaled an incredible density of talent.

So it allowed PayPal to succeed where possibly we wouldn't have.

And these people went on with interesting ideas, ambition, and talent to build epic companies, you know, in all kinds of verticals.

So from day one, I've always been, day one of my technical career, technology career, I've always been focused on how the importance of critical density talent.

How do you identify, retain, and promote people with that talent?

Back in the PayPal days, when I first started my career in technology, I actually truthfully was not very good at this.

Um, fortunately, Peter and Max were.

So Max basically hired all the technical talent in the organization.

Peter pretty much hired everybody else.

Uh, they used their network primarily, so it was very difficult to get a job at PayPal unless you had a first-degree or second-degree connection.

to the engineering team or to Peter through Stanford, which is a different type of recruiting model.

It works really well if you have a strong network.

I wouldn't recommend it for everybody, but if you have a network that has, you know, unique

talent, there's no substitute.

Interviews are not a great substitute regardless of how strong you are at interviewing.

But when I started my career, I was mediocre at, let's say, hiring people.

Probably 50/50, you know, some good people, some mediocre people.

That doesn't allow you to scale a team with an unfair advantage.

But what I learned to do is steal people from other people's organizations within PayPal very successfully.

So I got feedback from David Sachs, who was the COO at the time, that I wasn't going to get promoted again until I, until I could demonstrate leverage, like leadership leverage, which

he had an equation for of 1 1 has to equal 3 or more.

So for every incremental person you hire, you have to show that you produce disproportionate returns, nonlinear returns.

And because I wasn't hiring that well, I wasn't really succeeding at that leverage.

So when I went around, took the feedback into account, I said, hmm, okay, I really want to get promoted.

What do I do?

So I found people within the organization that I felt had talent that were, were not being leveraged to their highest potential and ambition, and I recruited them to my team.

And that was very successful.

And then I did get promoted actually fairly quickly because these people actually were up to speed.

They were able to run really fast and We produced a lot of really important results for the company.

The lesson though that I took away was, well, that's great because what it showed to me is I actually could identify talent.

I just couldn't identify strangers with talent.

So people that were in the building that I have lunch with or dinner with or go for a run around the PayPal campus with, I was accurate at diagnosing their abilities.

I just couldn't do it, you know, in a 20-minute, 30-minute, 45-minute interview.

So the first thing is just double down on people I know.

That doesn't scale perfectly, but learn to be excellent at, if I had context, assessing people's abilities, superpowers, and, you know, weaknesses.

Then over the next X years, try to identify ability, a different technique for identifying, assessing random people, because ultimately if you're going to build an organization, ultimately

if you're going to be a VC, you can't just invest.

In people that you already know.

So that took some years and required some training.

Anyway, I think you can teach some of this to a founder, but one advantage a founder has that's going to thrive is if a founder shows the ability early in his or her career to assess

talent ruthlessly and accurately, he or she can go very far with no other abilities whatsoever.

Hiring is like a muscle.

You need to exercise it.

You need to try, learn what worked, what didn't, what, what could you have known, what, what did you miss, why, and, you know, riff on that and try to get better at it.

There are tactics you can learn.

I think the tactics work pretty well within the middle of a bell curve distribution of moving yourself 10, 20 degrees within that bell curve.

I don't think the tactics can really teach you how to identify, call it like top 10 basis points, top 50 basis points of talent, there you have to deviate from the norm.

And I think that's actually true of most lessons in life.

If you're going to be extraordinary in any skill, you can't follow a playbook.

Otherwise, by definition, lots of other people would be, you know, the top 10 basis points.

But, but you can get a lot better by learning techniques.

So for example, let's share a couple.

One thing I think you can learn to do is, is be excellent at references.

It doesn't work for hiring people right outta college or something, because The reference context is gonna be a little off, but I think without getting better at interviewing and assessing,

if you just learn to extract the right information from ruthless referencing.

So for example, ruthless referencing to me means, uh, Tony at DoorDash does 20 references on every single senior hire.

20.

Wow.

I bet you he's pretty good.

I bet you he's been pretty accurate too.

Uh, so I think you can learn that.

That's like a, a skill that's teachable, that being absolutely, you know, incredibly dedicated to your craft, you can just get better at.

Back in the day, there was an investor at Greylock who's on my board at LinkedIn, David Zee, very successful investor, notable for both LinkedIn and Facebook investments.

He used to teach at Greylock, you couldn't stop referencing a founder until you hit a negative reference.

So, you know, you had exhausted the reference when you finally hit a negative reference.

And so I think there are tactics there in, you know, muscle building.

How do you get the right information from the right people?

How do you frame the questions, et cetera, that will lead you in the right direction?

Now you have to be careful.

Like, let's say, I'll give you an example where this can go wrong.

I've been a longtime investor from the seed round of a company called Fair.

Founded by

two of my colleagues at Square, Max Rentsch and Jeff Culverson worked for me at Square.

And then the two other co-founders also worked at Square.

When people were reference checking Max, often most VCs asked the wrong question, which was, was Max a good employee?

The answer to that is very mixed.

And so some venture capitalists, including some very good ones, were nervous about investing in Faro.

If they frame the question slightly differently, which is, is Max capable of being a world-class entrepreneur?

The answer was yes.

So you, again, it's like a tactic.

You have to understand like, what exactly am I trying to extract?

Same person, wrong question, wrong result.

And many people passed unfair and they regret it.

And these are actually quite talented investors.

They just didn't frame the question correctly when they were calling someone like Jack Dorsey up for the reference.

Any other questions you find really helpful in extracting the right information?

When, when I interview candidates for senior people in leadership positions, I always ask them, you know, look at whatever company they're at and say, if you were CEO, what would you

have done differently?

And you get a feel for their strategic mindset of, you know, can they drive value creation?

Because almost by definition, they've come from a company that's had some traction and success.

So can they end it?

So for your case, I would've asked you, you know, if you were CEO of Airbnb, what would you have done differently?

And you learn a lot from that question.

On references specifically, I think the, a general arc that's pretty good is asking the person, what would lead to this person being most successful?

And if something were not to work out, what would be the primary root cause that you can identify of something going wrong?

I think generally probing on those two arcs leads to a lot of insight.

And that first question is for the candidate, or, or is that in the reference?

Yeah, for the candidate.

That's for the candidate specifically.

Got it.

Um, because it's not like I don't want them to criticize Airbnb.

I don't, that, I don't think that's that productive, but you can tell how much of the current business model have they absorbed,

how much do they understand trade-offs, and then they, can they create an unfair advantage?

You know, can they, they have, they have insights into afterburners.

And then I have a follow-up question, which is usually gold, which is, let's say I ask you this question about Airbnb and you give me this great answer.

I'm like, well, why didn't you, why weren't you able to persuade Brian to do it?

So you made this interesting point that there's like tactics that can help you get better at finding and identifying talent.

A lot of this is just the feedback loop of doing it a bunch, it sounds like.

I find the feedback loop is so like, it's hard to actually like, like most people interview, hire, and then don't really learn much from how it ends up going.

Like there's this gut thing that happens, but they're not like really thinking about it.

Do you have any advice for just how to make the most out of the lesson of seeing how something went.

So I've read some research on the topic, and if you ask yourself 30 days after any hire, would you make the same decision?

That 30-day loop is pretty, pretty useful, and it, it basically, it's as accurate as measuring in a year or 2 years out.

So you get a pretty tight feedback loop, and you can ask the entire hiring team.

Uh, so I think that is like just a technique that every company should use.

I want to talk about this framework that you have.

Barrels and ammunition because this is really mind-expanding and helping people understand who to even hire.

So look, most companies raise money, they have some traction, they raise, you know, do a seed round, they get launched, get some traction, then they raise a lot of money, whether it's

a Series A or Series B, and then they hire a lot of people infallibly, or at least historically.

And then the CEO almost without exception gets frustrated because they've hired a lot of people, the burn rate has increased a lot, and they don't feel like that's more— get more is

getting accomplished per unit of time, per day, per week, per month, per quarter.

And they get frustrated.

And so then they sit around at a dinner with other CEOs or people like me, or one-on-one conversation with me, and are incredibly unhappy and disappointed that I'm spending all this

money on all these people, but we're getting less done or the same done.

And why, why, why, why?

After years of sitting through these conversations at dinner with other CEOs or COOs, I realized that the fundamental driver of this is that the number of people that can independently

drive an initiative from beginning, from inception to success is very limited within, within any company.

And if you hire more people without expanding the number of what I call barrels that can drive from inception to success, all you're doing is stacking people behind the same initiatives.

And so you're wasting time, energy, and increasing your collaboration tax.

Your coordination tax.

And so that's what causes the drag coefficient.

So for example, at PayPal, we had about 254 people in Mountain View when we were acquired.

Of those people, depending on how strict you really want to be, it is considered one of the best talent-rich networks of all time in technology.

There was between 12 to 17 barrels in the organization.

That's like an infinite number.

I once asked, uh, Jack Altman on a podcast.

At Lattice, which is a pretty damn good company.

How many barrels are in the company?

The answer was 2.

That's a more common answer for a very good company.

So you have between 2 and let's say 15 barrels at a company that defines unique number of things you can do in parallel versus sequentially.

And just hiring more people is not gonna change that.

And if anything, it's just gonna cause a collaboration, a coordination tax, and you're gonna have a drag coefficient.

You're gonna do less.

So the key is to me is if you want to do more or need to do more, your market requires you to do more, your business model requires you to do more, VCs require you to do more, you need

to have more barrels.

Now the question is how and when and, you know, all this, there's a lot of details there, but fundamentally the ratio of barrels to ammunition is what dictates the number of important

initiatives that can be pursued simultaneously.

And you're not saying you don't want ammunition, like it's valuable to make an impact.

You need ammunition in addition to the barrels.

Yeah, you definitely need ammunition and it depends on What kind of project?

There are types of projects where an individual barrel may be able to succeed with very limited or no, you know, ammunition.

Sometimes you may need a designer, an engineering team, a PM, a data analysis, blah, blah, blah.

Depends on what the project is, what the problem you're trying to solve is, what's the proper amount of ammunition.

But once you think about the ratios of ammunition to the problem, you can be much more constructive and deliberate and intentional about the team construction.

Most people hearing this, uh, assume they are barrels.

What helps you understand if someone's truly a barrel?

Can they take an idea and make it happen?

Basically, we're going up that— there's a hill over there.

That's the hill.

Get us over that hill.

And one way or the other, they will motivate

people if they need to, they will accumulate resources if they need to,

they will measure what they need to, and they're going to get your company across that hill.

That's a barrel.

Anything less than that is not a barrel.

And so this is skills like internal org stuff, resource, like strategy, like what, yeah, it's kind of the collection of all the things to get the collection of all those things.

It's just basically there's an outcome.

CEO wants, CEO founder wants an outcome.

And come hell or high water, this person is going to deliver that outcome.

Now the outcome can be, you know, fairly narrow and not that difficult in the beginning.

And then you expand the scope, you know, the complexity, the difficulty that you basically entrust to your barrels.

And, and sometimes they have no line of sight of how to solve it when you start.

Sometimes you have a preliminary idea, so it ranges, but ultimately it's that skill of I'm going to take this off your plate.

You can fire and forget, and this is going to happen.

And if it's not going to happen, I'm going to come back to you proactively with the issues I'm confronting, what I've already tried, the diagnosis of the root causes, and ask for your

help with sufficient time for you to intervene and try to brainstorm with me to get us to the right answer.

Agency is the word that comes to mind when you talk about this role.

Yeah, I think agency is accurate.

The problem I have with terms like agency is it's like a little bit like strategy.

It goes in one ear, a lot of people, and out the other ear, and they don't really process the meaning.

Yeah.

Who are some examples of barrels that make this real, so people can understand what you're talking about?

You know, I talked to my YC lecture in 2014 about how to, how to operate.

They can be as simple as the now somewhat famous in technology smoothie test, which is, you know, I— we used to have engineers work pretty hard at Square and pretty late.

And I always wanted them to have like food so they wouldn't be famished, they wouldn't be distracted.

And I didn't really want them to eat like junk food because I actually think junk food's bad for you, bad for your brain, et cetera.

So settled on delivering and really wanted to provide like at 9 PM, like cold smoothies.

And we had a, at that time, a pretty substantial team at Square, office team, EAs, you know, this was not a lean, mean organization.

And so I tried through the office team,

EAs, and nothing.

We never got

healthy, delicious, and cold smoothies delivered at 9 PM.

Just kept failing.

It was getting frustrating because if the smoothies aren't cold, then no one's going to eat them.

They don't arrive at 9 and no one can really bake on, you know, the refreshments.

Everything went wrong.

And then I had this intern named Taylor Francis, uh, and I was explaining just my frustration.

It was like his second day at work and he's like, I'll solve it.

And I was like, okay, kid, good luck with that.

Like, I was like, sure, keep trying.

Anyway, day goes by, 9 o'clock arrives and lo and behold, smoothies show up.

At 9:00 PM, delivered on the standing desk table where the engineers would congregate.

I sample them, they're cold, they taste great.

And I'm like, oh my God, I found a barrel.

And I later gave him almost everything to do.

I want to go back to actually the first question we did.

You shared some amazing advice for how to, uh, identify great talent, but I'm still curious when you find that barrel, for example, when like, Everyone's throwing money at them.

There's all these amazing teams to join.

What are some things that companies do to attract and convince them to join their team?

The standard stuff is still true.

Mission.

Selling the vision and mission is indispensable.

Most people have proven talent anyway, at least in the current world, are going to attract offers from multiple opportunities.

And so you've got to convince them that your opportunity is very special.

I think one way to do that that's a little bit more nuanced is convince them that their particular skill

overlaps with the critical blockers to the current company, meaning they're betting on themselves.

So for example, if they're superb at, let's say, marketing, if the biggest blocker of the company in the company's current success is not technology, not the product, but we believe

it's marketing.

It's really easy to go to a world-class marketing person and say, not only is this great company building something really cool and interesting that you'll be proud of, but your particular

ability is very unique and differentiated, and you can solve this.

This is actually how I wound up at Square back in 2010.

Um, I was actually— I'd just been acquihired into Google and, um, was planning on being a VC actually next, after I was kind of like investing whenever Google is gonna compensate us.

And then the investors in Square called me up and they said, hey, we've been looking for almost a year now for someone who knows something about financial services yet is still entrepreneurial.

And they're, they're like, hey, there's only 3 of these at the time, 2007.

There's like, there's only really 2 or 3 of you in the world, you know?

So would you be interested?

And I said, well, maybe.

But that was the argument to me that made me leave Google early, like after 2 weeks and infuriate everybody and bypass, you know, venture for another 3 years, which had been my plan,

was because they made the argument that, hey, I was one of the 3 people in the world that could actually do this job.

So there's like a, I don't know if it's ego, but it's also just like impact.

Yep.

Well, exactly.

Impact.

Like you have, you have talents, you wanna use them and you wanna feel that you're challenged every day and that what you're doing really, really matters.

So that I think that can be extremely helpful.

You know, my more important arc in this is I think you have to build a company on undiscovered talent.

Like, I don't think you really want to compete for the people that everybody else wants.

Right?

And you know, I learned this at PayPal.

Peter taught me this literally the first day, the first week of my job at PayPal, that the way to build a company— we were jogging around the Stanford campus— is you've gotta find these

undiscovered talent.

That's the only way to scale an organization against these large incumbents with infinite money, etc.

And, you know, I've been on that crusade for 25 years.

For those who are interested, you can link to it.

I gave a speech at Ramp, you know, how to hire, but talks in detail.

I also recommend Eric, CEO of Ramp's speech, which is fairly similar.

Both videos are online.

That's such interesting advice and it makes so much sense.

You're not going to be able to afford the people that have done the thing at top companies.

And also they're just probably not the people to join early.

Well, they're also not maybe the people you want.

So there's adverse selection.

But you know, it's like a salary cap.

Most sports these days have salary caps.

And when you're a startup, not only do you have a salary cap, you probably have 1/10 the salary cap of the people you're competing with.

So you've got to figure out how to leverage, you know, less assets to more success.

What's just one tip when you're looking at, when you're looking for undiscovered talent, that's a sign of, okay, this person is really special.

I know you have a lot to talk about here, but just like, what's one tip?

I think it's basically isolating why

other people aren't going to process them correctly.

Like most recruiting at large organizations becomes sort of a homogenous function.

And so if you understand why this person is going to get thrown into this black box kind of thing and not get processed accurately, it's pretty easy.

So I always think about, you know, let's say this person was interviewing at Meta or Google or Block these days or Coinbase.

What are they going to miss?

And then why?

And then that leads to, oh, perfect.

So sometimes it's just lack of information.

Like one of the reasons why, you know, sometimes it's controversial to say this, but one of the reasons why the net impact of my higher undiscovered talent is you wind up skewing younger.

It's not because you need young people.

It's that younger people have by definition less data.

It's like, you know, we use credit scoring.

FICA scores.

It's the same thing for employment.

By the time you're over 30-some-odd things, there's so many data points about you that this black box machine is usually going to process you like many other people.

If there's no data points, it's very hard for a black box machine that does homogeneous evaluation to evaluate you.

So there is alpha, so to speak, by definition for people who have like no data points.

It's interesting how this is the same skill as being an investor.

Picking startups to invest in.

Yeah, absolutely.

Okay.

I want to talk about something else.

I asked a few people that know you well, that work with you at various companies, what to talk to you about.

And one person said that when I asked him what to talk about, he said, my immediate reaction is that he is a bar raiser.

No matter what kind of numbers we put up, he pushes us to do more.

In fact, often it seems like the better we do, the harder he pushes.

Uh, does that resonate?

Yeah, I think that's true.

I mean, I think, look, ultimately, I'll channel someone else's feedback, but it's in the same vein.

So

a friend of mine who's a CEO once asked Mike Moritz, like, what's the most common denominator of the best CEOs ever?

And he said, it's the relentless application of force, quote.

I think that's the job of the CEO.

People eventually get comfortable, complacent.

The more success you have, the more complacent the organization tends to get.

And the single role for the CEO is offsetting that complacency.

So to the point, the more success you have, the better you're doing, the more complacency naturally kicks in.

And unless you've erected a network effect, you do not want to get complacent.

And even then, you can debate whether you should.

But like, fundamentally, most businesses are not network effect businesses.

They are not going to run on, you know, on their own for a long time.

So I think that's one insight is the better you're doing, the more the CEO should push.

Secondly, it's a little bit like sports when you're growing up.

People, when they're winning, take advantage of feedback better than when they're losing usually.

Like, so for example, you know, now what I do is mostly, mostly VC, mostly a board member, mostly like a consigliere to a founder.

And when the company's struggling, Maybe what's less intuitive, and you may have picked up on this in your research and, you know, interviews of people who know me, when a company's

struggling, I'm actually usually very non-critical and more like a coach and supporter because the company, the founder knows they're struggling.

Being critical doesn't really help them solve their problems.

That's when being supportive can actually somewhat counterintuitively be more important.

But when the company's thriving, it's really important to be critical in isolating things that will eventually be problems while everybody in the company's really happy and borderline

complacent.

So you, you kind of want to be the opposite as a default.

And that's like a sim— a really good sports coach.

When you're winning is when to polish everything and really master the details.

When you're losing, you definitely also have to be exciting people and embracing the future and selling the future.

So is the advice, say someone's listening, a founder or a product leader, the advice here is just keep pushing harder, set the bar higher as things, even if you're doing great.

Yeah.

If you're doing great.

Well, also you have to remember, like, I remember giving a speech once at Square is like, you get to a certain threshold, it creates an inflection.

Momentum gets you to certain, you know, valuation and all the, all these like attributes.

but it's kind of like winning a Super Bowl.

You get the last year was great.

Last 4 quarters were wonderful.

It's like winning the Super Bowl.

You gotta come back next year and start your record zero, zero again.

And you gotta remember that actually venture is like that.

You know, I, I'm only as good as my last investment.

I've had like 13 years or whatever of pretty damn good investments, but like truthfully, I have to wake up every day and find some undiscovered founder.

That's going to change the world.

And if I don't do that, it doesn't matter what I've done the last 13 years.

And a company's kind of like that.

The company can skate on autopilot for a while.

Venture, you really can't ever skate.

I definitely saw this with Brian Chesky.

It just felt like things were going great and we just shipped amazing products and growth is up and he's just, just always like pedal to the metal no matter what.

Just like, come on, when are we going to take a little break?

And it's interesting because when we did have little breaks here and there, morale actually went down because people were like, what am I working on?

I don't know.

It's not that exciting.

Brian and I are usually in sync a lot.

Um, there's a really good interview where I interviewed him also at the same conference of how to hire, uh, when he talks mostly about founder mode, but I generally subscribe to virtually

all of Brian's views.

He even taught me some of these things himself.

Uh, but the, the, the more important point I think you identified, which is very subtle.

Is really talented people are like superb athletes.

And when things are going well and people are really kind of coasting, they're not happy.

They have an internal clock tempo.

They just want to create things and create value and drive, drive.

And like, you know, like the morale actually does go down for the best people in the world when people are skating.

Okay.

So actually along those lines, There's a lot of anxiety in the market, in the job market about the future of careers.

Am I going to have a job?

Am I going to like, where are things going?

And it just feels like people are working very, very hard.

There's just putting a lot of hours, especially the most AI-pilled people.

It just feels like they're working harder than ever.

I don't know if you saw this thing Tyler Cohen put out of just like, work harder.

Now is the time to work harder because AI is eating away at your value.

You know, you probably talk to a lot of people looking for career advice of just like, this feels scary and, uh, I feel like I'm working too hard and what should I do?

I don't know.

Do you have any just like advice for folks?

Well, I do think AI, AI is going to radically reorient, you know, lots of people's careers and maybe including mine.

So I think that's actually true.

And I think the way to thrive in a rapidly emerging technology world is to be intellectually curious.

So for example, you know, I'm a business person historically, you know, I did actually code when I was really young, but like basically professionally just a business person.

What I've noticed in some of the best organizations is the number one consumer of tokens is the CMO.

CMO.

Because these people are intellectually curious.

And so they're like, wow, there's all these cool things I can do now with my hands.

Either I had to rely on other teams or never got access the way I wanted and blah, blah, blah, or lag, and they just do it.

This is actually true at Opendoor.

It's true at another great company that I'm on the board of that's incredible.

And I, so I think you can be intellectually curious and future-proof yourself, um, more than just, yes, you can work harder and I, I'm a big subscriber to like no days off and working

all the time and all that stuff.

But fundamentally, the intellectual curiosity is I want to learn new things.

And that is how you embrace the future.

So, and you said CMO is who's using the most?

CMO.

Both these two companies.

So interesting.

Both massive, you know, awesome companies with lots of engineers.

And I think that's, that's very encouraging.

Um, you know, for, for the executive particularly, I'm like, this, this is definitely like the best executive in the company.

And what are they building?

Is it like landing pages and paid tests?

Stuff.

Well, sometimes it's like more like what we would've thought of analytics.

Sometimes it's actually campaigns, like actual campaigns.

It's just like they don't need to rely upon deputies and deputies and deputies to get actual work product.

And so they're just like shipping things and like, or shipping, you know, drafts of things or giving the CEO insights into things themselves.

I want to get your take on the future of specifically the product triad.

You work with a lot of product people, engineers, designers.

Everyone's always wondering what the hell is going to happen in my career.

Thoughts on just the future of those three specific roles?

Well, I saw this podcast or listened to this podcast that Peter Fenn did, and he convinced me that the idea of a PM makes no sense, basically, in the future.

If you think about decomposing the logic is what does PM usually do?

They take these inputs from customers, they create this sequential roadmap that's well organized over the next year, blah, blah, blah, blah.

That world is like ridiculous.

Like right now, the capabilities of foundation models or companies like Lovable and, you know, things like that are just so improving such a rapid rate that it makes no sense to have

a year-long roadmap.

And they, they just like incoherent.

There are things that were impossible to do in November that are actually pretty easy to do right now in March.

And so I think you need to build an organization that's incredibly adept at, you know, people say nimble and all this stuff, but incredibly adept at changing the roadmap almost on the

fly.

And I think intermediaries like conventional PMs don't make a lot of sense versus being prepared intellectually embracing and exploiting, noticing.

So someone needs to notice that, oh wow, we can actually do this, but then exploiting it this week is the future of a very, a high-growth stellar startup.

We'll notice that something's now possible this week and create new features and new value for customers next week.

That's such an interesting area of discussion.

A lot of people listen to this RPM, so I want to try to defend that role just to see If you see if I can convince you otherwise, uh, and by the way, I will say Mark Andreessen had this

really good visual of just what's happening here is like every, all those three functions, it's like the standoff where they're all like, I'm good taking the future is my role.

The future is design.

That's engineering is the future.

So the way I see it is as AI makes it easier to build and kind of eats the middle of the software development process, just anyone can build, you tell the AI, here's what I want.

Um, the hard part.

The, the gap, at least for now, is figuring out what to build and then aligning everyone around what to build.

I agree with that.

I actually think, like, whether you talk about someone who used to be a PM or someone who used to be a designer or called an engineer, the skill is more like being a CEO now, which

is what are we building and why.

Exactly.

And it, to be a successful engineer, that trait's critical.

To be a successful designer, because the tools and the, the ability to actually create the thing, an object, is going to be easier and easier.

But the art is knowing what to build.

You know, another competitor of mine, Alfred Lin at Skoia, likes to talk about being a chef.

When you're a chef at like a prime restaurant, you're not actually cooking the dish.

You're sampling, you know, your colleagues and, you know, editing their work a little bit.

But fundamentally, it's half a commercial role.

Being a, being a chef at a famous restaurant is what's our value proposition?

How do we differentiate ourselves?

How do we brand ourselves?

What's our segment?

What's our pricing?

You know, et cetera.

What's our location even?

That's what makes, you know, a famous chef.

It's not, they're literally cooking the dish all the time.

Okay.

I 100% agree.

Interestingly enough, PMs are called mini CEOs often.

And I think the important thing is it's not like, what do you call this person?

I think the question is, What skill will be most like, where are human brains still going to be necessary?

Business acumen.

It's basically business acumen.

Right.

Like what will help this company grow and succeed?

And exactly.

I understand the company's business equation, where we're trying to go and what the inputs and connection outputs are.

And I can on my own create things that move the needle or potentially move the needle.

It's very exciting because, you know, you can actually drive impact.

Like much more easily now as an individual.

My conclusion based on what you just shared is of the 3 roles, which role is best at that?

And historically it'd be PMs.

Obviously I think the important thing here is it's like the best, you know, it's like great PMs or great engineers, designers will do well.

But I think interestingly what you're describing to me is what it sounds like what a great PM would be really good at basically.

If they were exceptional, I think that's right.

But I think the best, a lot of the best engineers I've worked with have commercial instincts like Max Levchin.

Has this on steroids.

Jeremy Stoppelman, you know, he's worked with me very closely at PayPal before he started Yelp and got promoted to be engineering director and vice president of PayPal, had commercial

instincts, you know, back when he was an individual contributor.

So I think there are great engineers who are technically proficient that have always understood the business building.

Yeah.

I think that's like the ultimate unicorn is an engineer that is also very business-minded.

It's going to put a premium.

I think this will, at the age of AI, will put an incredible premium on that because they're not gonna need a large team.

You're not gonna be marshaling the forces.

Like, you know, another example is a good friend of mine is director of engineering at Ramp.

He ships as much code personally.

So he, he has a team of about 20 people.

He personally ships as much code as he used to as an individual contributor while he's managing a team of 20 because the tools are so great and he's become a leading pioneer in the

usage of AI.

And he's basically using AI as a, as a second team.

He's basically like, okay, you're the team manager.

You do this, you do this, you do this, stitch this together, check this out, blah, blah, blah.

And I think that is definitely in the future.

I 100% agree.

Engineers that are very good at that are just extra valuable.

Uh, what's your take on design and the future of design, the value of design?

Well, you know, it's interesting.

I, design and code are merging and it's not, it's not clear to me.

Who triumphs of like, is it code becomes design and/or design just translate automatically into code?

Um, I've made some investments that bet on both in some ways, but I think they're merging in a way where they're not separate, you know, fiefdoms anymore.

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What I'm seeing is something really interesting happening with design.

On the one hand, I just did some analysis on the job market for design, and it's basically plateaued in terms of the number of open design roles over the past 3 years.

It just hasn't gone anywhere.

It's flat.

We had, uh, the head of Claude did design Jenny Nguyen on the podcast, and she had this kind of insight that the design process, there's no time for the design, the traditional design

process.

There's like engineers are shipping 17 things a day.

There's no time to sit there and help mock and prototype and all these things.

Well, let me give you a couple of concrete examples.

So at Shopify, the way they develop, they've developed, they've been doing this for over 2 years now.

So this may seem normal, but they have not let PMs, uh, provide like PowerPoint or Keynote presentations on product for like 2 years.

Every presentation on product has to be a workable demo and they just expect the PMs to create the products and the, the, the execs just refuse to look at static, you know, we're gonna

have this feature.

No, I want everything working.

This is for 2 years.

So I think that, you know, again, like everything's just merging together.

That's so interesting.

You would think though, because there are so many products launching every single day, like there's just endless things to pay attention to.

You think design would be a differentiator more and more.

I do agree with that.

I, I do agree with that actually.

I think the alpha is in design, just like in marketing.

It's not the tools, it's not the channels, not the metrics.

It's the storytelling.

It's how do you cut through the clutter in the snappiest, most compelling possible way?

There's an, it's kind of an NP problem.

There's so many different words you can use to express the same concept.

But the person who can say this is the way to frame it, you know, the proverbial thousand songs in your pocket is worth like all the tools in the world.

Yeah.

So that's the other part of my insight recently is just as AI makes it easier to build, it's kind of expanding from the middle out.

And what remains is figuring out what to build and making it, iterating on the idea.

And then it's at the other end of the spectrum, which is distribution, getting anyone to pay any attention to what the heck you've done.

Because again, there's so much happening every single day.

Yeah, cutting through the clutter.

I mean, that's always been critical.

I mean, one of the time when people are pitching me as an investor, it's one of the things I'm dialing into, you know, immediately is how the, how the hell is this gonna cut through

the clutter?

It's one of the reasons why I don't like to take like customer feedback into account because by definition, when you put something in front of a customer, that's not a proxy for the

real world.

In the real world, you have to cut through the clutter while they're going to their Barry's boot camp, while they're doing their job, while they're raising their kids, you know, et

cetera, et cetera.

A lot of their walking while they're on the subway like that, like, you know, an isolated fake experiment doesn't give you actionable insights and often is directionally wrong.

Interestingly, on that line, uh, there's a few companies that are launching— Simile is one that is simulating humans.

I don't know if you heard about this company.

They basically are building AI models of the actual people so that you can simulate your marketing launch and your product experience with people before you launch?

I don't know if I've seen that specific company.

I have, um, seen one or two, uh, sort of pitches.

My, my general question as a refrain on those type of companies is what are they training on?

Because like, again, if they're not training on the right data, it's dangerous to say you're simulating humans.

Yeah.

Yeah.

That is the question.

Oh man.

What a weird world.

Along these lines, actually, you have this, uh, I don't know if you call it a hot take that AI content is going to surpass human content and that's just the future.

I think that's inevitable.

Someone was, I was talking to someone and then she was saying in like the Chinese TikTok app, it's just like all AI videos now.

And it's like very good.

She like actually enjoys watching these videos and these stories.

I think there'll be like a binary sort maybe.

I could see products and content thriving that is clearly still human generated and that there's some desire for authenticity.

Just like, for example, you know, this piece of art is a Warhol.

Anybody could create this now, high fidelity, but there's still an appreciation for this was created by Andy Warhol.

I think there's gonna be a curated experience, uh, with a premium of provenance, you know, that you know is human created.

And then there's just gonna be a, a sort of a rank filtering of what's the best content and whether it's AI generated or not.

It's a little bit like the Ben Thompson's Stratégie thing of curation.

You know, versus algorithm, there's gonna be two poles and the curation may be for human-created stuff.

And then there's gonna be the algorithm, which is just what's the best.

I 100% believe that.

That makes so much sense.

I was just thinking the other day, it's so interesting that AI is getting very good at video.

Like videos are actually fun to watch that are AI generated.

And then like images are getting really good, but writing is still really bad.

That is AI generated.

And, and it's ironic that it's called a large language model.

It's all context, text, text trained.

And it's just like, that's the thing it's least good at, which is really weird.

Well, I think part of it, that's an economic decision of token rationing by, um, the LLMs.

Like they, they basically are, when you prompt, they're kind of trying to make their economics work within a bell curve distribution.

And so for example, if you, uh, prompt an LLM to write something that's very short, The quality is significantly better than if it's a page, paragraph, I mean, page to chapter to book.

I think it's token rationing, ratioing versus, versus actual quality.

You would think though, you know, like, I don't know if it was Hemingway of just like, if I had more time, I would have made it shorter.

Like it takes more work, but then you have, I think the writing right now, what works best is short, many short.

Examples and then picking, editing, reprompting.

It's a little bit like when I used to be a litigator 25+ years ago.

The hardest part of writing a brief, or all the art and all the magic, was the first paragraph.

If I could write that first paragraph really well, the chance I would win the case and convince the judge would go through the roof.

So what I would actually do is I might have 3 weeks to write a brief.

I may spend the first week or more walking around the office

thinking through how am I going to nail the first 3 sentences.

Once I figured out how I wanted to frame those first 3 sentences, I could write 30 pages in like 2 days.

But getting that right could take a week or 2.

Sometimes it would occur to me in the shower or literally the, you know, shower or in the middle of a run.

It's like, oh my God, here's how I distill it.

Then I could just sit down and power through the rest of the brief.

And I think it's a little bit like that.

The powering through the rest of the brief works well.

You still need the first 3 sentences.

Is there a story from that time in your life that would be interesting to share?

I didn't even know about that.

So yeah, not everybody knows, you know, I spent the first 4 and a half years of my professional career as a law clerk and then litigator, which occasionally comes in handy, truthfully,

like sometimes.

Trading off business risk against legal risk is a valuable thing to do.

Sometimes it's not accidental that many of my best investments are in financial services and heavy, heavily regulated areas, because I think I can sort of do the legal risk assessment

in my own brain.

This is definitely true back in the day when I invested in YouTube.

But I think most things that lawyers learn are very

inconsistent with being an entrepreneur.

So when you're graded as a lawyer, you learn every exam in law school virtually is, uh, issue spotting.

So you get credit for identifying, there's like fact patterns, identify all the issues and then resolve them.

So you learn to identify everything that can go wrong,

moderately useful, but very not useful as an entrepreneur.

I mean, sure, you can identify all the reasons a company could fail.

Not that difficult to do.

The art is, you know, solving those.

So, you know, not the best training.

And then you also measure your productivity by hours worked, you know, literally your bill per hour.

It took me 2 years and maybe a year and a half after converting to technology to stop tracking all my time.

I used to literally write down in my notebook, half hour of this meeting, 20 minutes on this, you know, blah, blah, blah.

I just couldn't get it out of my brain.

That is so funny.

And David Sachs was a lawyer too.

It's like interesting.

That's true.

Peter, Peter was a lawyer.

Peter was smart enough to quit after 5 months and 4 days.

I think David never practiced, or maybe even smarter than both of us.

Okay.

I want to hit on some hot takes, contrarian takes that you have.

You have a number of these.

I heard you share on a podcast recently.

They asked you, why don't you have as many contrarian takes these days?

And you're like, well, they've just all been proven right.

And that's the problem is, you know, if you have good ideas, eventually you want them to be adopted.

It's a little bit like, uh, you know, when you're an investor, you wanna be contrarian.

So Airbnb, you start with a contrarian take, but eventually if the company's gonna succeed, it has to become consensus.

Like everybody in the world has to use it and believe in it and trust it.

So you want that inflection, like you don't want to just have contrarian takes and then nobody believe it.

So you do need a refresh rate.

Um, and then the question is, how do you have a You know, how do you find new ideas, but you want to actually exhaust them.

Okay.

So one that I think people still disagree with is that your advice is for, um, for unless you're building an enterprise company, you don't actually want to be talking to customers.

Yeah.

I hate talking to customers.

I refuse to allow colleagues of mine to talk to customers.

You know, there's the, the famous, you know, you can talk to the famous stuff and the Steve Jobs, you know, the horses and you want faster horses and all this stuff.

But I think it's more important is it's often directionally wrong.

Customers don't know what they want and they're very bad because it's a subconscious decision, especially for consumers.

Like what I purchase, what I wear is not a conscious decision.

And when you're consciously trying to answer a subconscious decision, you actually give misleading information even when you're trying.

You know, the proverbial example I like to use, but it, it's instructive is Ask anybody who drives a super fancy car like a Porsche or a Lamborghini, like why they bought the car.

99% of the time they will tell you every reason except the real reason.

That once you realize that, you're like, I'm never asking customers anything.

Now, in hardcore enterprise, customer development does work because there is a, there is a decision maker.

And the decision maker is mostly making utilitarian decision.

And yes, there's political forces within the organization and they may or you may or may not be able to tap into those.

But fundamentally,

extracting that information is valuable, but a consumer, SMB, micro merchant product, unmitigated disaster.

And so the implication here is you need to rely on your instincts and gut and experience.

Yeah.

I mean, humans are humans.

I have this other line I like, which is everything important you need to learn about humans was written by Shakespeare.

Just read Shakespeare.

Like, that's better than all the customer research.

Um, now you are producing a movie and ultimately this movie doesn't just need to be critically acclaimed.

You have to sell tickets.

So if you're not selling tickets, you have to question, okay, is the trailer wrong?

Is our distribution, you know, where we're trying to meet people to let them know about the movie, is that wrong?

Fortunately, unlike a movie, you can go back and say, Have I casted this somewhat incorrectly?

Is the script slightly off, you know, et cetera.

But the goal is selling tickets and that's what you want to optimize for.

But if you don't sell tickets successfully, economically, efficiently, you definitely want to go back in a loop and try to reorient things so that you are selling tickets.

So this is like CAC/LTV kind of stuff is what I'm hearing here.

And so your, your insight here is just like, it's not only like It's like, it's not gonna help you.

You're saying more so it's actually harmful.

It's harmful.

And then people will say, yeah, like I've sat in so many meetings and this would infuriate me, but where people would be like, I talked to 8 customers, blah, blah, blah, blah, blah.

And I know that this isn't statistically represented, but then they pontificate for an hour and then, and then they're like, oh, I know this is not, you know, blah, blah, blah.

And, but once you hear this stuff, it's like you can't take this outta your brain.

And then every other subsequent meeting is like this, this stuff is just locked in the customer's brain.

So yes, in the enterprise when you have like, I, I work with a company in AI that has 30 must-win accounts.

That's like the goal for the company over the next 2 years, make sure all 30, and we're doing really well, get all 30 using our product.

Great.

We actually can talk to all 30 customers and we can actually meet the decision maker, all 30 customers, and we can influence the CEO, right?

All 30 customers.

That is a useful exercise.

If you're targeting a billion people on the planet, you are not getting representative feedback.

Being a contrarian take, many people would not believe this is good advice.

Do you have a story, maybe, or an example of just like, wow, this, like someone talking to a customer saying we're going in the wrong direction for a while?

Oh, all the time.

They're called failed companies.

You know, there's a, there's a reason why.

I mean, there's a Darwinistic efficiency to this too, which is just like,

Hey, there are things you can vet, like, is it feasible to do X, Y, or Z?

So for, let's say, let's get like DoorDash.

I don't, I don't, I don't think customers told us that we want a button on our phone to click to deliver food, but you could talk to restaurants and say, hey, would you put this placard

here so that people walking into your store know in the future that they can get delivered?

Okay.

Yeah, maybe.

Then could you run an experiment of how many deliveries per hour would you have to do to, you know, break even?

And is there enough density, you know, within this?

Like, there are ways to improve the odds that you can make the business work, but I don't think launching the company saying, hey, we found 10 people in Palo Alto, you know, do you