Latest / 1 to 100 / E32: Behind the Scenes at Kno

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E32: Behind the Scenes at Kno · 1 to 100

• 0:00
  What do you think, Bar what is it like to be CEO of No?
• 0:03
  Did Jeremiah leave leave like a mess for you to clean up?
• 0:06
  What's What's the deal? And no, you know, I think
• 0:09
  luckily we'll so for one, Jeremiah still like, you know,
• 0:13
  somewhat involved. I don't know what percent you'd
• 0:15
  say Jeremiah of your week. Maybe like 510%.
• 0:21
  So it's not like I was just like left with with like, you know,
• 0:28
  no support and no context at all.
• 0:30
  But yeah, I think, you know, it's, it's fun.
• 0:33
  It's we're we're doing some new things that we can talk about
• 0:39
  like with with NPS. But yeah, overall it's kind of
• 0:45
  like the same, you know, I think for the most part it wasn't like
• 0:50
  a just night and day shift. It wasn't like one day Jeremiah
• 0:55
  woke up and was like, I'm gonna go do this stamp thing.
• 1:00
  It was more of like a, a gradual shift in and then like one day
• 1:05
  we announced it to the public. So I feel like some, you know,
• 1:07
  from from an outside looking in, they might think that, but it
• 1:13
  really was like a, a pretty gradual shift.
• 1:15
  I don't know how you feel about that, Jeremiah.
• 1:17
  Yeah, definitely. I mean, I still feel customer
• 1:20
  support things from people and drop it and I've even even today
• 1:25
  there was a big threat of all the the new product stuff that
• 1:29
  got released this week. And so I dropped it.
• 1:32
  I was like, Hey, what about this thing?
• 1:34
  Are we still doing it? So I still get, I still get to
• 1:37
  do some of those things, but I, I'm not just doing as much of
• 1:42
  the day-to-day. So so.
• 1:45
  So, So what Jeremiah does is metal while you have to run the
• 1:50
  business this, this is like roughly how this has shaken out
• 1:54
  basically. Battling.
• 1:58
  As low as possible. I I try to be very I don't know
• 2:02
  what do you think bar you could you could disagree with me here.
• 2:05
  Do you do you feel like I I meddle too much or is it an
• 2:07
  appropriate level of metal? I think, I think it's the
• 2:11
  appropriate level. I think it's kind of, you know,
• 2:14
  like one topic is I, you know, I think our product team and I
• 2:22
  would say this to them. So I'm OK saying it on the air
• 2:26
  too. I think we've been moving
• 2:27
  really, really slow over the last year or so.
• 2:32
  Like it, you know, like one thing that's that sticks with me
• 2:36
  is Sean Frank. I don't know if you guys, if any
• 2:39
  of you guys were ranked by him like you did like this, the star
• 2:42
  system and sent out an e-mail with the operators.
• 2:45
  This is probably like a year and a half two years ago now, but he
• 2:48
  gave no like a three out of five stars for like not innovating
• 2:52
  much and that like you know, that stings because he's a
• 2:56
  customer. He's been a customer for a long
• 2:58
  time and so yeah, like we haven't innovative much in the
• 3:05
  last two years and I'm very much trying to change that.
• 3:08
  Obviously Jeremiah helps a ton with that vision.
• 3:13
  And so to go back to the, to the original question, you know, I
• 3:16
  think he's, he's really helping like set the vision and then
• 3:20
  almost keeping us accountable because he's like out of the
• 3:23
  business for, you know, X amount of time.
• 3:27
  So then like he is the outsider looking in.
• 3:30
  So when we say we're going to release a feature in X amount of
• 3:33
  time, he doesn't really know what's going on in the business
• 3:38
  and like what, you know, certain tasks like lead up to the, the
• 3:42
  bigger picture. So like this morning, for
• 3:45
  example, he was like, Hey, what? Like what else is remaining to
• 3:49
  be done And how are we looking on that?
• 3:51
  We're like everyone on the team would probably know that, but
• 3:54
  Jeremiah doesn't cuz he's not like in the day-to-day.
• 3:56
  So it kind of keeps us accountable.
• 3:59
  So I just annoyed sort of dumb questions.
• 4:04
  Yeah, Yeah. I was going to say, you know,
• 4:06
  what's so interesting about that is it that's exactly what it
• 4:09
  feels like to have an investor on your board.
• 4:12
  So it's also, I think the more useful part of this and I'm, you
• 4:20
  know, I'm like being a little funny about it, but the, the
• 4:23
  most useful part of this is like for other people who have SAS
• 4:26
  businesses, at some point you're going to want to know, like
• 4:31
  Zach, I'm actually curious what your answer to this is.
• 4:34
  Like at some point you're going to ask yourself, do I want to
• 4:36
  continue to run this business? Do I want someone else to run
• 4:39
  the business? Do I want to sell the business?
• 4:41
  And this is a version of, OK, I'm going to groom another
• 4:45
  leader from the company to run the business, right.
• 4:50
  Yeah. And, and, and it's an
• 4:51
  interesting, like Concord changing of guard, changing of
• 4:56
  leader. Yeah.
• 4:57
  Zach, I'm, I'm curious like, like do you want to run it until
• 5:03
  an exit point? Do you think that at some point
• 5:06
  you might want to ask, you might have someone else lead run the
• 5:09
  business? Like how do you think you would
• 5:11
  make this decision and how how how a friends of yours made this
• 5:14
  this type of decision? My ideal situation is I run it
• 5:20
  until an exit. But like and and like the root
• 5:26
  reason for that is that I think there's like a lot of like
• 5:29
  really, really good data around like the outcomes of companies
• 5:34
  led by the founder. And like, I also just like
• 5:38
  couldn't really imagine a hired CEO like figuring out how to
• 5:41
  sell the business like unless they were like really
• 5:47
  incentivized in like some very particular way.
• 5:53
  And then like also it's just like, it's also just like not my
• 5:56
  vibe. Like I think there's like these
• 5:57
  people that are like super super operator and they're like they
• 6:01
  build businesses and they install people.
• 6:03
  It's just like, not me. Like I definitely approach it
• 6:05
  from like I, I do like working on it.
• 6:09
  And so I, I would definitely hire someone as like a COO that
• 6:13
  was for all intents and purposes CEO, though.
• 6:15
  That's certainly something that I would do.
• 6:18
  But like ACEO from like an operations like all of the other
• 6:22
  things for business like I, I, I would, I would do that would be
• 6:26
  great. There's some examples you guys
• 6:30
  can think of, of businesses that brought in that you know, call
• 6:36
  it like step in leader, step in CEO that are crushing you right
• 6:39
  now. I.
• 6:41
  Mean the most part. I mean the best example of all
• 6:44
  time was Snowflake, right? Like Snowflake has always had an
• 6:49
  outside CEO and currently has an outside CEO is doing just fine.
• 6:56
  I know a bunch in the private markets and and like SAS that
• 7:00
  are that's outside of ECOM that has had like an outside CEO
• 7:04
  brought in once they hit like starting at roughly the $30
• 7:08
  million revenue scale, like somewhere between the 20 and $40
• 7:11
  million revenue scale, they crush it.
• 7:14
  One that people don't talk about a lot is Hashicorp.
• 7:16
  Do you guys know the Hashicorp story?
• 7:21
  This is a fucking phenomenal story.
• 7:23
  And then bar, I want to continue to talk about your experience,
• 7:26
  but the the Hashicorp stories of Mitchell Hashimoto and his Co
• 7:30
  founder. In the first couple of years of
• 7:33
  Hashicorp, they were trading off being CEO.
• 7:38
  There were Co founders and they're like, oh, you should be,
• 7:40
  you should be, you should be eventually They like talk to
• 7:44
  each other one day. And they were like, neither of
• 7:47
  us wants to be CEO, right? And they're like, yeah, like I
• 7:50
  don't, I don't like this. Like because the CEO job and the
• 7:53
  founder job are not the same. And, and eventually everybody
• 7:56
  realizes this at some point in the company.
• 8:00
  And again, usually that's around 20 to $40 million of revenue,
• 8:03
  right? Because like now you're dealing
• 8:05
  with like real up for Hashicorp. It happened much earlier.
• 8:08
  It happened like a $2,000,000 of revenue because they had a big
• 8:11
  open source project. There's a lot of reasons.
• 8:13
  But anyway, they brought in an outside CEO and Hashicorp has
• 8:17
  crushed it, crushed it with an outside CEO the entire time.
• 8:21
  And so there are lots of examples of successes with
• 8:25
  outside CE OS or outside people running the company.
• 8:29
  Yes, the average data is that the founder CEO leads to better
• 8:34
  outcomes. And then I'll say the last
• 8:38
  thing. And then again, I really borrow,
• 8:40
  I want, I want to hear more about your experience, but do
• 8:43
  you guys listen to my first million?
• 8:47
  Yeah. So, so like Sean, for example,
• 8:50
  doesn't run any of his companies, right.
• 8:53
  And so anyways that that it's like it's just one of those
• 8:56
  things that when you are building companies, I think it's
• 9:00
  a worthwhile question too. I also think that the role like
• 9:04
  the, I think that the label of CEO before you have like 50
• 9:07
  employees is so silly like. Right.
• 9:12
  I saw someone the other day. You're just.
• 9:13
  Different stuff. You're just.
• 9:14
  A founder like you're not really aceo like people that are like
• 9:18
  three people and there's like and they're like LinkedIn says
• 9:21
  CEOCOO and she's like, no, you're just a bunch of like
• 9:24
  retards with laptops, dude. Like chill out.
• 9:27
  It's like, like, I just don't really understand like the CEO
• 9:30
  label when there's not like a lot of people because like if
• 9:35
  what you are doing is like CEO tasks at that level, like you're
• 9:38
  probably not even doing the right thing.
• 9:41
  I saw someone with that, their self given title was managing
• 9:45
  partner of like an organization with like 3 people.
• 9:47
  I'm like, oh, that's a, it's a sleight of hand.
• 9:50
  You're making it seem like this is a lot bigger than it is.
• 9:53
  But but yeah, it's a, it's a real role, right?
• 9:55
  It exists for a reason. I, I don't know about this word
• 9:59
  outside CEO because you know, all these CEOs, they come inside
• 10:03
  after they're hired, right? And they have a job to do,
• 10:06
  right? And so all of them are judged
• 10:10
  based on whether they can do that role properly.
• 10:12
  Jack, that's like a George Carlin joke.
• 10:14
  What is an outside CEO? They're inside.
• 10:18
  I definitely agree with. That's not like a fractional
• 10:21
  CEO, right? This isn't someone who's, you
• 10:23
  know, outside of the business anymore, right?
• 10:25
  They're very, very much in the business and they're there for a
• 10:27
  reason. Well, I, I actually think that
• 10:29
  the reason why it's so different is because it is so different to
• 10:34
  come into an organization with, at a level that you are CEO with
• 10:38
  having zero prior context. Like there was, there's, there
• 10:42
  is significantly different like approaches to like those two
• 10:47
  people versus like, like, for example, like the company that
• 10:51
  bought Noaa's like about social snowball, like the CEO of that
• 10:55
  company started as like an SDR like 20 years ago or something
• 10:59
  crazy. Like that's not a nice outside
• 11:02
  CEO And like that. And the way that he approached
• 11:04
  the day that he became CEO would be so much different than if
• 11:06
  they were to like go through a recruiter and then hire the CEO
• 11:11
  and the company would probably go in different directions
• 11:14
  because it's like when you have the context it, it, it is just
• 11:17
  like so much different. I think when is.
• 11:20
  That how you feel, Barr. I think I feel well.
• 11:26
  So yeah, outside CEO, I would never do.
• 11:28
  That's just change management and everyone's going to be like
• 11:31
  who the fuck are you and why are you here?
• 11:34
  What's the crush? I, I this is just blowing my
• 11:37
  mind. What if this person is
• 11:38
  incredible, right? Like, what if they do an
• 11:40
  incredible job? You you were mentioning earlier
• 11:43
  that you were in this star list for Sean Frank two years ago and
• 11:47
  you got three out of five for lack of innovation.
• 11:50
  And then but like, things are still moving slowly, right?
• 11:53
  Don't get me wrong, I'm sure Noah is innovating now, but what
• 11:58
  if an outside CEO crushed it and did an incredible job?
• 12:01
  Yeah, I think, I think that outside CEO would need to bring
• 12:06
  in their own team. I think it's really hard to like
• 12:11
  come in and have an existing team with an existing, you know,
• 12:18
  functionality that is, or an existing process that like a
• 12:25
  brand new person comes in and is able to, you know, like drive
• 12:30
  that ship. Yeah, I think my experience is
• 12:34
  also a little bit different. I like came up in the world of
• 12:38
  like, so like my first job was working.
• 12:42
  I don't know if you guys know Noah Kagan.
• 12:44
  We we like kind of brought like sumo.com to the forefront and
• 12:50
  this is like way back in the day when shop I was just getting
• 12:52
  started, Clavio was just getting started.
• 12:54
  Like, you know, you could go outbound cold e-mail like 100
• 12:58
  people and 50 of them get on a call with you and 30 would
• 13:01
  close. It was like, you know, just a
• 13:03
  different world of D2 CE com and like his whole philosophy was
• 13:09
  like, how do I bring someone in to be an operator, to be that
• 13:13
  CEO and for for me to like turn it into like more of a lifestyle
• 13:17
  business and and take like distributions for Appsumo and
• 13:20
  for Sumo. And you know, if you like follow
• 13:22
  the Noah journey, it's like literally like on, off, on, off,
• 13:26
  on, off, like, which like I love Noah.
• 13:28
  But like at the end of the day, it does end up kind of coming
• 13:31
  back to like Zach's point that like the like the founder is
• 13:37
  really like the core person that that can lead Eamon.
• 13:42
  I don't know if you guys follow a app zoom at all.
• 13:44
  Eamon like kind of came in and he he took him to like 100
• 13:48
  million for a bit. Now he's doing like his own CEO
• 13:50
  coaching stuff. But eventually, like he left,
• 13:53
  right. And then like some other people
• 13:55
  have tried to step into that role.
• 13:57
  And I think that role is really, really, really hard to fill.
• 14:00
  So yeah, I don't have that much experience with like outside,
• 14:03
  quote UN quote, outside, you know, CEO stuff.
• 14:06
  But yeah, I think the only like in my experience, like what I've
• 14:10
  seen is, you know, you need to have someone that knows the
• 14:14
  business inside and out, knows the customer, knows the pain
• 14:17
  point. So yeah.
• 14:20
  What what do? What do you think bar like?
• 14:25
  What is your diagnosis of? What has, what led to and what
• 14:31
  is the current challenge for the pace of innovation that you are
• 14:35
  unsatisfied with? Yeah, I think I would probably
• 14:40
  like, if I had to just put one like 1 diagnosis, I'd probably
• 14:46
  say shiny objects syndrome. And I think we have, you know,
• 14:53
  chase that shiny object without really putting all our eggs into
• 14:59
  that shiny objects to then the next, you know, the next week,
• 15:01
  another shiny object comes that'd be like kind of like the
• 15:05
  core, like overarching theme. And then there's, you know, all
• 15:10
  the other, you know, just infrastructure, all the like,
• 15:15
  things that happen in in like SAS.
• 15:23
  And then the third is probably, you know, I think they're like,
• 15:27
  it's probably like a downstream effect of like being owned by a
• 15:34
  publicly traded company and being a part of a portfolio
• 15:37
  company. I think there's, you know,
• 15:40
  there's just like the, the upside is just not as high as,
• 15:47
  you know, doing a bootstrap thing or doing a, a BC back
• 15:54
  thing. So yeah, I think I would kind of
• 15:57
  categorize into those 3 buckets. So that last one is not capping
• 16:02
  the motivation of the team to execute.
• 16:05
  I would, I would say in some ways it is, you know, there's
• 16:13
  just, there just isn't, there isn't as much of an upside as
• 16:20
  there is with other businesses. So it turns into more of a
• 16:25
  lifestyle business versus a like hockey stick, you know, type
• 16:31
  business. I was just going to share one
• 16:34
  thing that I've learned in the like venture backed startup
• 16:39
  world, which I'm, I'm curious if this is like sort of what you're
• 16:43
  describing is you want to feel like your efforts, if it leads
• 16:49
  to the business growing, it will lead to your outcome changing in
• 16:54
  the commensurate way. And so a, a thing, I mean, the
• 16:59
  way obviously that VC backed companies do it is by issuing
• 17:02
  options, right? And so like we, we actually just
• 17:07
  went through this exercise because our, we raised our B6
• 17:10
  months ago or whatever, five months ago.
• 17:13
  And so we're like, there was an option for secondary in that
• 17:18
  round for people who wanted it and there was an option to like
• 17:22
  re up people, right? And so like it does this thing
• 17:25
  where people feel the value of their equity because they were
• 17:30
  asked if they wanted to to sell. And it also does this thing
• 17:34
  where it's like, wow, I'm being given more equity in this
• 17:37
  company. It's like, I'm like increasing
• 17:39
  my ownership in the outcome of this thing.
• 17:42
  And I think that at least in the VC world, that's like how you
• 17:46
  get that like extra energy from people because they see their
• 17:53
  they see their effort directly tied to the outcome, basically.
• 17:57
  But I'm, I'm in, in your context, like Jeremiah Barr, I
• 18:01
  like, I'm very curious how you guys do this.
• 18:05
  And Zach, I'm very curious in the bootstrap world, how how,
• 18:08
  how you think about this. Yeah.
• 18:10
  Yeah, profit sharing on December 31st.
• 18:14
  But nice. Wow you literally do profit
• 18:16
  share with people. Yeah, and it's like it's not
• 18:21
  predefined at the beginning of the year.
• 18:23
  It's I usually spend like Boxing Day until New Year's, like doing
• 18:30
  like a lot of planning and shit, which I'm actually building a
• 18:33
  new business. What is Boxing Day?
• 18:38
  Sorry, it's like a Canadian thing that's like Black Friday,
• 18:42
  but it's the day after Christmas.
• 18:44
  And like the whole thing was like, there's only like old,
• 18:48
  like stores had like a bunch of like, it was just like like get
• 18:51
  boxes out of the store for like the new shipment inventory to
• 18:54
  come in. And that was how it started.
• 18:55
  And it's kind of like a Black Friday thing in Canada.
• 18:58
  It's yeah, the day after Christmas.
• 19:01
  And then yeah. So then I just, yeah, send out
• 19:04
  wires between December 26th and January 1st based on like
• 19:09
  performance and things like that and actually like how profitable
• 19:13
  business was. Is that gonna ask another
• 19:16
  question? Yeah.
• 19:20
  Why don't Why did you choose profit sharing over giving
• 19:24
  people slices of equity? Well, there's like a few things
• 19:30
  like 1. Like some people do have
• 19:32
  options. I really like equity for myself
• 19:41
  because totally I love equity too.
• 19:43
  I, I also just think that like if I were to like multiply the
• 19:49
  like the likelihood of I obviously think that options to
• 19:55
  employees is the biggest scam of all time and I, I don't, I'm not
• 19:59
  saying it doesn't work, but I think it's the biggest fucking
• 20:04
  sham of all time, especially when people are raising at like
• 20:07
  a 25 X multiple. I think it's fucking.
• 20:10
  Bullshit. I think that most people I think
• 20:12
  it's good for you to do, but I think actually tangibly in the
• 20:16
  way that it like facilitates in people's lives is next to
• 20:20
  nothing. I have like a ton of equity in
• 20:22
  which I cannot realize in other companies.
• 20:26
  And so it is super valuable if you want to stay with the
• 20:30
  company super long term. But like the the like the lock
• 20:34
  in the liquidity that exists for most people.
• 20:37
  And if you think about like the average time horizon for
• 20:40
  liquidity to happen. And then if you even take into
• 20:42
  account the compounding effect of profit sharing and then what
• 20:48
  would probably be like a diluted price versus like the last
• 20:51
  round, it potentially would have been better for people to get
• 20:54
  cash those like last five years and have it invested in a lot of
• 20:59
  cases. But I do think it's a really
• 21:03
  great carrot. Yeah, I'm with Zach.
• 21:05
  I'm not saying it's not. I, I don't know if I'd go as far
• 21:09
  as calling it a massive sham, but I'm with Zach and that
• 21:15
  generally speaking, I don't think equity is meaningful for
• 21:21
  employees. If you're on a founding team, if
• 21:23
  you're C-Suite in those kinds of cases, then yeah, equity is
• 21:27
  great. But I think for a typical
• 21:29
  employee, it like 99.99% of the time it's not going to be
• 21:35
  meaningful for you. Now it's it can be great for
• 21:38
  like a lottery ticket, but like you've got to be on the right
• 21:41
  rocket ship. You see all the time companies
• 21:44
  that get to massive exits and because of the way that they got
• 21:49
  there, the equity is not worth anything to, to most people in
• 21:53
  that context anyway. So, and obviously that doesn't
• 21:55
  always happen, but I think that's the majority of, of
• 21:59
  cases. So I, I kind of agree with the
• 22:01
  idea of, I don't know, I, I have mixed feelings about it.
• 22:04
  I think there's, there's something, I, I think some
• 22:10
  version of it where like you get to share in the profits of the
• 22:14
  business or you have some sort of, if you can grow the company
• 22:22
  based on like this formula for example, there's some sort of
• 22:25
  incentive for you at the end of that.
• 22:26
  I think that's interesting. But actual just like straight up
• 22:29
  options I think don't work for most people.
• 22:31
  But like I, I think it, yeah, obviously there's acceptance to
• 22:35
  that for sure. And for sure of that you're
• 22:38
  something some of your employees actually got like pretty good
• 22:41
  payouts probably. But it seems like me that's the
• 22:44
  exception, not the norm. I I mean also like these, these
• 22:48
  new marketplaces are making it different as well.
• 22:51
  I was going to say that I, I, I, I think like, I think that I
• 22:56
  would have been more on your side of the spectrum three years
• 23:00
  ago. I think the liquidity in the
• 23:05
  secondary market is a lot more liquid than was historically
• 23:09
  true. And I think that the fraction of
• 23:15
  companies that are able to provide liquidity along the way
• 23:18
  has also increased a lot, both because of what Zach, what you
• 23:24
  were saying in terms of the market places and things like
• 23:28
  that, but also because VCs are wisening up to the fact that
• 23:34
  people need to provide liquidity to their employees along the
• 23:36
  way. Otherwise this this whole thing
• 23:38
  doesn't work. And so actually they are way
• 23:41
  more willing to buy secondary than they've ever been.
• 23:45
  And they're like, fuck, like a bunch of funds getting created
• 23:50
  because of this new realization who only buy secondary.
• 23:56
  And so I think the I, I understand where the perception
• 24:01
  is coming from. And I know that there's a bunch
• 24:03
  of companies that are like that and that people like actually
• 24:05
  don't make money off of that equity.
• 24:07
  But I, I, I'm not sure the direction of travel is, is, is
• 24:13
  going to stay that way. Basically, yeah.
• 24:15
  Well, I do think that like, I mean, I generally believe that
• 24:18
  private company stock is going to become more liquid than ever
• 24:21
  before in the next 5 years. Like I'm like, I, I think if you
• 24:28
  can just like look at like what's happening with like the
• 24:31
  world in general, like everything's becoming tradable
• 24:34
  and everything's becoming tokenized and everything's
• 24:37
  becoming gamble able. And so like over the next five
• 24:41
  years, I think private companies stock will be much in a much
• 24:47
  different place. But then I also think it is
• 24:50
  important too to like make sure that your incentive structure is
• 24:52
  actually aligned with what the business is optimizing for.
• 24:55
  And like currently foreplay does not optimize for enterprise
• 24:58
  value. And so to like be giving equity
• 25:02
  as an incentive would be like two sides of a coin that don't
• 25:07
  match, you know, like it. Doesn't.
• 25:08
  Make much sense? Yeah, that's all we do.
• 25:12
  Like 100% of what we do is to optimize for enterprise value.
• 25:16
  But that's the goal. The goal is the sale.
• 25:19
  I've talked with a couple publicly traded companies that
• 25:23
  you think would not care about profit, but they are publicly
• 25:27
  traded software companies that operate at like a 30 to 40% Net
• 25:31
  margin. Like, yeah, we don't acquire
• 25:32
  things that 10%, we don't acquire things at 7%.
• 25:35
  Why would we bring in revenue at like a lower Net margin for our
• 25:39
  shareholders? And so it's like based on even
• 25:42
  like what I've seen from like the people that would
• 25:44
  potentially want to acquire us, like really, really healthy net
• 25:48
  margins is actually what would get the deal done, not double
• 25:53
  our ARR. Bar, how do you guys think about
• 26:00
  it in the context of like a portco for like what are the
• 26:05
  incentives that could drive people?
• 26:07
  What are the tools at the disposal for someone in that
• 26:10
  context? Yeah, it's mostly cash, Yeah,
• 26:14
  similar to to Zach, I think. Yeah, for us, it's probably
• 26:19
  cash. Like the reason why people work
• 26:22
  at NO is, is cash and lifestyle kind of categorize it.
• 26:29
  You know, we, we are definitely steadily growing.
• 26:34
  But I think if you were to talk to any of our employees, like,
• 26:39
  like, you know, our average employees been there for like 2
• 26:43
  1/2 three years. We have people that have been
• 26:45
  there for much longer than that. You know, in general, people are
• 26:51
  happy to be there because it's never like a like stay up all
• 26:58
  night type grind. Like we do have like sprints
• 27:00
  that like do feel like that. But in general, you know, we
• 27:04
  have like one person on the team that has an e-commerce business
• 27:07
  on the side. You know, we like a lot of
• 27:10
  people have like kind of side projects and are able to like
• 27:14
  provide value for no and like bring in enough value for note
• 27:19
  to more than cover their salary, but then also have enough time
• 27:22
  on the side to do their own things.
• 27:26
  It's very efficiency focused. So definitely not a grow at all
• 27:32
  cost mindset. And this this actually comes out
• 27:35
  of tiny acquirer. They are like their whole thing
• 27:41
  is they want to buy great businesses and run them forever.
• 27:43
  That's the idea. And so it's about steady,
• 27:46
  stable, profitable growth. And that means building a
• 27:50
  company and a culture that is that can do that.
• 27:55
  I can sustain that for a long period of time, right.
• 27:57
  So I think that's yeah, it all kind of like you kind of see how
• 28:01
  like things naturally flow down from like what what the goal is
• 28:05
  at the top. But yeah, I, I agree with bar
• 28:09
  like that. I don't think, yeah, it's not
• 28:12
  you don't have to work 60 hours a week.
• 28:15
  You do sometimes like that happens, but it's not like
• 28:18
  that's not the norm. Most people are working, you
• 28:21
  know, 40 to 50 hours a week, I would think.
• 28:24
  I guess I'm not involved in the day-to-day, but but yeah, you
• 28:28
  don't have to. It's not.
• 28:29
  It doesn't feel like a crazy grind in the way that it could
• 28:32
  in different contexts. If I could ask a very naive
• 28:36
  question, can you help me reconcile that and that like
• 28:41
  what I would describe as like culture and value system with
• 28:45
  the shiny object syndrome that you talked about?
• 28:48
  Because you would expect like you would expect shiny object
• 28:52
  syndrome at like a company like ours.
• 28:56
  It's like we're chasing growth. I mean, like literally we're
• 28:59
  chasing growth at all costs. And so like it's pretty obvious
• 29:03
  how you get shiny object syndrome.
• 29:06
  And so maybe help me help me put put the shiny object syndrome in
• 29:11
  in your context. Yeah.
• 29:13
  I think instead of like if we reframe it, it's instead of
• 29:18
  chasing growth at all costs, it's like satisfy satisfy the
• 29:23
  cost customer at all cost. And you know, I think that's
• 29:28
  like a lot of how we've grown. You know, we're at over 6000
• 29:33
  shop buy stores now and you know, continue to grow is like
• 29:38
  it's mostly like a brand play, right, like on on the no side,
• 29:43
  like they know us as the most helpful post purchase survey
• 29:48
  tool, right. And you know, we're we're in a
• 29:51
  lot of different places like, you know, so it's like you hear
• 29:55
  about them a lot and then you hear good things about them.
• 29:58
  That's kind of like the ultimately what brand comes down
• 30:00
  to. But yeah, for us, it's I think
• 30:03
  historically it's been, you know, just chasing customer
• 30:08
  happiness. And you know, I think one thing
• 30:14
  that I'm trying to kind of get the team to center around is if
• 30:19
  you build a product that it, if you only listen to your
• 30:25
  customers and only build products that your customers or
• 30:28
  features that your customers are asking for, you're probably
• 30:31
  going to end up, you know, driving to the ground like your
• 30:36
  customers don't necessarily know what they don't know.
• 30:38
  Obviously, you should always survey your customers.
• 30:41
  You should always be in touch with what they are asking for.
• 30:47
  But there is a pretty big open space in the market.
• 30:53
  A lot of times that they don't they're not aware of, they're
• 30:55
  not aware of like macroeconomic issues happening.
• 30:59
  And so historically, the shiny object syndrome has been us
• 31:04
  just, you know, kind of listening to customers and
• 31:07
  trying to satisfy them. And a lot of the shift that
• 31:10
  we're making now is, hey, yeah, we still definitely want to
• 31:14
  capture all of that data. And we have that data.
• 31:17
  Are we going to go have that as like AP1 priority for our
• 31:21
  product? Probably not.
• 31:23
  And so, yeah. You should have that on the
• 31:26
  results of your no surveys. You know, you've got all the
• 31:29
  information about what the customer wants, but then say
• 31:31
  actually don't do any of this. You know, pay attention to
• 31:34
  macroeconomic conditions instead.
• 31:36
  Yeah, Yeah. You know, it's like I think, I
• 31:38
  do think it's a little different for brands than it is for SAS,
• 31:41
  right. Like, like, you know, you look
• 31:45
  like at a Ridge, they're obviously like doing a bunch of
• 31:48
  like innovation and they're going to a bunch of new product
• 31:51
  categories. And they certainly used post
• 31:53
  purchase surveys for that. You know, you look at some of
• 31:56
  these others that like are just in one category.
• 32:01
  You know that you're, you're using those post purchase
• 32:03
  surveys as like ad angles and like new creative and, and that
• 32:10
  in that type of environment. And like a lot of times you do
• 32:13
  need to like look at that and take it with two, you know, 2
• 32:16
  grains of salt. Like you, you probably are
• 32:19
  hearing one thing, but you know, knowing your business, you're
• 32:23
  going to actually interpret it in a different way, right?
• 32:26
  So yeah, yeah, I think I, I don't know how do, how do you
• 32:32
  guys think about like product innovation, product development?
• 32:35
  Are you guys listening to your customers?
• 32:36
  Are you just like, you know what we know best?
• 32:39
  Is it like somewhere in the middle?
• 32:42
  I mean, for sure. And I, and I also think that I
• 32:45
  can kind of reconcile what looks like shiny object syndrome at
• 32:49
  Fermat probably being something closer to rapid execution and
• 32:56
  testing and learning and moving forward.
• 32:59
  But the difference between that and shiny object syndrome is the
• 33:02
  lack of focus, right? When we talk about shiny object
• 33:05
  syndrome, we're talking about people looking at new things,
• 33:09
  trying new things, but then kind of dropping it, not seeing it
• 33:11
  the whole way through. So I mean, I, I can see that in
• 33:14
  a culture of comfort. I I also, I, I just don't, you
• 33:18
  know, I don't know if I don't want to say it doesn't exist.
• 33:22
  And I'd love to hear what you guys think, especially your
• 33:24
  sharp and I think I already know what you think, Zach, but is
• 33:30
  that the norm? Or are businesses growing or
• 33:33
  slowing? Are they like, are they growing
• 33:36
  and they're motivated and impassioned and building what
• 33:40
  they think is right or building what their customers want or
• 33:43
  they dying right? Because I think you can do the
• 33:45
  heavy lifting and know probably did of building a great product
• 33:49
  and ride that way for a while, maybe a really long while.
• 33:52
  But if you're not innovating, I don't know.
• 33:54
  It's it's One Direction. Yeah, I, I also want to add a
• 33:58
  little bit to a bar. I was saying to you, I think
• 34:00
  when I think of shiny objects under, I think part of the
• 34:02
  problem we've had to know is we built a product that is
• 34:05
  extraordinarily flexible and it can do a lot of things.
• 34:08
  And so there's a lot of like, OK, well, we can do this one
• 34:11
  thing slightly different and now it enables this entire new use
• 34:15
  case for somebody. So we, we have had over the last
• 34:18
  couple of years a lot of that where it's a lot of like we can
• 34:21
  kind of do this thing. It's not that great.
• 34:24
  It takes a lot of work like it's nobody else can do this.
• 34:27
  But like actually we're not doing it that well either.
• 34:30
  And so I think a big shift that we're making is, is really
• 34:34
  leaning in and saying, OK, well, instead of us being like an OK
• 34:38
  solution at 100 different things, like we still do that.
• 34:42
  You can still do these things, but let's also like pick a
• 34:45
  couple of very specific things and be excellent at those
• 34:48
  things. So like the one that we're
• 34:49
  working on, bar just mentioned this, but bar and I had a
• 34:52
  conversation what three months ago where, and this is this came
• 34:56
  from bar. So credit where credit's due on
• 34:58
  that's where he basically was like, look, we have 10 different
• 35:02
  things that we're like trying to slowly push forward.
• 35:04
  I think we just need to pick one and NPS is what we settled on
• 35:08
  and just like go fully focused on making that excellent and
• 35:12
  then pick one of these other things.
• 35:13
  And so instead of trying to like slowly push through forward a
• 35:16
  bunch of different things at the same time, which doesn't work
• 35:20
  with our mandate to be profitable and grow sustainably,
• 35:24
  like that could work if we added, you know, $2,000,000 of
• 35:28
  extra cash into the business to go hire another engineering
• 35:31
  team, right? But in terms of the context of
• 35:33
  how we're trying to run this business, that doesn't work.
• 35:35
  And so we have to say, OK, let's pick an area, focus the
• 35:38
  excellent this thing and like our NPS product that's coming
• 35:41
  out will be incredible. Like it, it is going to be the
• 35:45
  best NPS. It already what I've seen it's
• 35:47
  the best NPS product for e-commerce, which makes sense
• 35:50
  because we actually were almost there already.
• 35:53
  We just needed to package it in a way that was easy for brands
• 35:56
  to use. And so that's the kind of thing
• 35:58
  that we're trying to do where I think with shiny objects under
• 36:00
  looked a lot like half baked things and a lot of different
• 36:03
  things because there's so many opportunities and now it's like,
• 36:07
  OK, let's just focus and do this thing and do it really well.
• 36:12
  I think so. I'm sometimes retroactively
• 36:15
  looking back at something and saying it was shiny objects.
• 36:17
  Object syndrome can be also a, a side effect of marketing and go
• 36:22
  to market not properly servicing the new thing and then also like
• 36:29
  activation of current customers. Like I have a firm believer that
• 36:31
  it's, it is way harder to get someone that used you for X to
• 36:37
  use you for Y than it is to acquire someone for Y.
• 36:42
  And So what happens is, is that you come out with this thing
• 36:45
  that for all intents and purposes could be great, or it's
• 36:47
  like 10° of separation away from being great that you need
• 36:50
  iteration for. And what happens is your
• 36:54
  marketing go to markets continues to lean into the thing
• 36:57
  that you've always been known for because it's like, that's
• 36:59
  the playbook. But you like, you forget about
• 37:02
  how much iteration and how much work went into making X work.
• 37:05
  And now you're just like, oh, Y should just work alongside it.
• 37:08
  But it's like, no, like, like we've had this too, where it's
• 37:11
  like we've had customers be like, I can't believe you guys
• 37:13
  don't market this feature. It's so much better.
• 37:18
  And I was like, yeah, you're fucking right.
• 37:19
  So like we still kind of just talk about the main thing.
• 37:22
  And so like, was it shiny object syndrome or did marketing go to
• 37:26
  market just like not make the shiny object thing go on the
• 37:30
  shelf like enough? Because if there was like
• 37:34
  thousands of people using it, you wouldn't be like, it was
• 37:36
  shiny object syndrome, right? It's a good point because if you
• 37:39
  think about like in software, the buying cycle for something
• 37:43
  can be, is typically months, sometimes longer, depending on
• 37:48
  what it is in, in B2B software. And so you, you have to do, I
• 37:54
  mean, that means that generally if you're going to sell
• 37:57
  something that's meaningfully different from your core product
• 37:59
  to your existing customers, you still have to go through that
• 38:01
  cycle in that process. It's not like that gets, I mean,
• 38:04
  it does get shortened a little bit, but it doesn't go away.
• 38:08
  And so if you don't see it out far enough and from the sales
• 38:11
  and marketing side of things, it is just going to not really go
• 38:14
  anywhere. I I think so bar I have a great
• 38:21
  idea for you and you can choose to use it or not use it, but you
• 38:24
  should buy T-shirts for everyone on your team that says Nope like
• 38:31
  KNOPE so that way they remember to just say no to everything and
• 38:39
  you know what I mean? Like so so that's my that's my
• 38:45
  one idea for you, but I'll. Say no to working a little bit
• 38:49
  longer. You know, it sounds like it's a
• 38:51
  it's a very comfy culture. I I'm a big fan of this idea
• 38:54
  that growth happens at the margin, right.
• 38:56
  The athletes make discoveries and exercise and health, right.
• 39:01
  The scientists make discoveries in in science, right.
• 39:04
  The people who are crushing it, who are like hungry and
• 39:07
  ambitious get things done right. And yeah, I'd love to hear what
• 39:12
  your guys thoughts are about building up a culture where that
• 39:16
  isn't really central, right and and then looking towards a
• 39:20
  future of the company that wants more innovation.
• 39:23
  Yeah. One thing I would say on no
• 39:24
  though is I don't think I've worked in software cultures
• 39:27
  where it was, it was about comfort and leisure.
• 39:31
  No, is not that like to be clear, like it's not about
• 39:34
  comfort and leisure, it's about sustainability, if that makes
• 39:37
  sense. Like I I think there is actually
• 39:39
  like a meaningful difference there where there's a there's a
• 39:43
  version of building a software company where you're grinding as
• 39:45
  fast as you can, as hard as you can because you see that there's
• 39:48
  a short term, you have a short term objective, if that makes
• 39:51
  sense. Yeah, that's not how no
• 39:53
  operates. No's operating from a how can we
• 39:55
  be better in a year that we are today five years than we are
• 39:59
  today, 10 years than we are today, Right.
• 40:01
  So it's a different sort of. So I, I don't know if that makes
• 40:04
  sense, Jack, but I'm, I'm, I do want to be clear.
• 40:06
  Like, it's not like we just like.
• 40:09
  People just sit around and do nothing.
• 40:10
  The people work very hard. People are very dedicated to
• 40:12
  what they do, but they feel like they can keep it up over a long
• 40:16
  period of time. And I think that's the like to
• 40:20
  me, I do think that's a distinction.
• 40:21
  And so I think you can still strive for excellence in that
• 40:23
  context without feeling like like you might get burnt out in
• 40:28
  the process. And I think that is how I would
• 40:30
  frame that as as being different.
• 40:32
  So I mean, bar you were you went on a month long, almost a month
• 40:37
  long vacation the summer because he went and did a once in a
• 40:41
  lifetime trip. And it's like, he can do that,
• 40:44
  but that doesn't mean he's doing that all the time, right?
• 40:50
  Yeah, I'm, yeah, I just wanted to quickly chime in on this like
• 40:54
  idea of like how do you, how do you not have shiny object
• 40:59
  syndrome and, and, and and things like that?
• 41:02
  We had this exact issue, like it crept up on us basically because
• 41:08
  the company grew in headcount very fast between middle of last
• 41:16
  year and middle of this year. And at some point I had to tell
• 41:21
  people like, if you will have more than one important thing
• 41:25
  that you're working on, like something is like terribly wrong
• 41:30
  and bar your sequencing framework is the right
• 41:33
  framework. Like you can't tell me that you
• 41:36
  have three important things. Like if I ask someone like, hey,
• 41:39
  what is the one thing that you're work working on?
• 41:41
  And like at our last like, company offside, you know, the
• 41:44
  like Avengers, like it like God, what's his name?
• 41:51
  Benedict Cumberbatch, He like puts his finger up.
• 41:53
  It's a different context, but it was like, I was like trying to
• 41:57
  get people to have some visceral image of like think only about
• 42:01
  one thing because this is actually the, the way in which
• 42:05
  it always creeps up as people are just trying to like do
• 42:08
  multiple things. Now I will say that there's a
• 42:12
  more serious thing that you could do is you could just tell
• 42:19
  people to ignore all customer requests.
• 42:22
  And, and we did do that for a while because it's the only way
• 42:28
  to get people to understand that they can actually do that.
• 42:32
  So you literally just say like anything that comes in, I want
• 42:36
  you to ignore for a period of time because you have to do
• 42:41
  something dramatic to get the momentum to shift.
• 42:43
  Like one of my big learnings about like how do you get the
• 42:47
  company to operate in a different way is you actually
• 42:50
  have to operate the company differently.
• 42:53
  And if you're not willing to operate the company differently,
• 42:56
  the company will not operate differently.
• 43:00
  And and so you have to do some dramatic action.
• 43:04
  So, so, so we did that and I coupled it with canceling all
• 43:08
  internal recurring meetings in favor of a daily stand up for
• 43:12
  the entire company. And so people like felt like
• 43:15
  they woke up the next morning and their day was totally
• 43:18
  different and they felt the difference because the company
• 43:22
  was operating differently. And so they're like, OK, I get
• 43:25
  it. Like we have to operate
• 43:26
  differently. So it's just something I think
• 43:28
  about is like you're never going to get a change in operation
• 43:31
  unless you operate differently, so.
• 43:36
  Yeah, Yeah, it's good. It's good feedback.
• 43:38
  Swing the pendulum the other way and then hopefully it equalizes
• 43:43
  in the middle. Yeah.
• 43:45
  How did, how did you guys like if there were bugs that were
• 43:48
  coming in, were you guys also just ignoring that or did you
• 43:51
  just just customer feature requests?
• 43:56
  It was all in the territory of what I understood Jeremiah was
• 43:59
  saying, which is like, hey, could you do this?
• 44:01
  Could you do this? And it was like always all
• 44:03
  feasible. And we used to say yes to a
• 44:07
  bunch of these paper cuts. And then we literally just
• 44:11
  blanket said, no, I'm, I'm not joking.
• 44:14
  Like truly Blanket said no bugs. You have to.
• 44:17
  I mean, bugs are like you're committing to something, doing
• 44:22
  something, and it has to do the thing.
• 44:25
  But But yeah. And then and then all of a
• 44:27
  sudden, like your engineering team can actually worry about
• 44:31
  like, what is the thing that I now need to go actually build?
• 44:37
  Yeah. The thing that you underestimate
• 44:39
  is that you look at something, you say, oh, that's going to
• 44:41
  take an hour to do, but it's not an hour.
• 44:45
  It's like there's the conversation about it, there's
• 44:49
  the headspace that it takes up. There's the fact that it's
• 44:51
  taking you away from this other thing like the, all of that
• 44:53
  stuff ends up like, and that, I mean, honestly, like I think
• 44:58
  every software business I've ever been a part of has this
• 45:00
  problem on some level of like, how do you choose what to
• 45:04
  prioritize when there's constant requests coming in?
• 45:08
  And it's not just from customers, it's from internal
• 45:10
  teams, it's from partners, it's from auditors.
• 45:14
  Like in the context of us being in a, in the, in a publicly
• 45:18
  traded company, there's, there's random people that are
• 45:20
  associated with the, the auditors that are like, Hey, I
• 45:25
  need this thing. And it's like, Oh, I, I don't,
• 45:29
  somebody's got to now drop what they're doing and go deal with
• 45:30
  that thing, right. And so it's like, you have to
• 45:32
  figure out how to, I agree with your shop, like you got, you got
• 45:35
  to figure out how to cut that out.
• 45:37
  I'm curious to you, how long? How long did you go where you
• 45:40
  basically recite like no to all customer requests?
• 45:44
  Even now. Yeah.
• 45:46
  And now it's been four months. Is it some sort of like sorry
• 45:50
  that you put them in or do you just say no, like don't like?
• 45:54
  Delete. Delete.
• 45:55
  Delete OK. Yeah, delete.
• 45:57
  You got to delete everything because if it's actually
• 45:59
  important, they'll still be asking in six months.
• 46:03
  I, I, there was this guy who I used to work with, like one of
• 46:06
  the funniest people I've ever worked with, but he would answer
• 46:09
  how many of her emails he got to in that day.
• 46:11
  And then he would just hit delete on everything else.
• 46:12
  And he was like, if it's important enough, he'll e-mail
• 46:14
  me again. And there's actually a lot of
• 46:16
  wisdom. I mean, like, it was insane, but
• 46:19
  there was a lot of wisdom in in that approach to life in, in my
• 46:24
  opinion. Yeah, But you just have to hit
• 46:27
  delete. Yeah.
• 46:29
  And, and I think, by the way, there's a psychological thing
• 46:32
  here that we're not talking about.
• 46:34
  But engineers like to build stuff.
• 46:37
  OK. I'm just going to say that.
• 46:40
  And this sad thing about these little paper cuts is it gives
• 46:44
  them dopamine. And you need to get rid of that
• 46:49
  because now you're not giving them the psychological safety of
• 46:53
  feeling like they're making progress when they're not
• 46:55
  actually making progress on the thing that matters.
• 46:58
  And so if you say you must say no to everything, meaning I'm
• 47:01
  deleting this entirely, now all of a sudden there's nothing for
• 47:05
  them to latch onto, which causes this like spiral of like, why
• 47:09
  can't I get this thing to move? It's because people are doing
• 47:12
  things that make them feel like they're making progress.
• 47:14
  It's like, no, you're not allowed to feel like you're
• 47:16
  making progress unless you're actually making progress.
• 47:19
  That's the other like sort of psychological reality you have
• 47:23
  to confront. I don't know if you guys would
• 47:31
  agree with that, but that's at least been my observation. 100%
• 47:35
  right. You got to you got to fight
• 47:37
  those short feedback loops, right, get people focused on the
• 47:40
  long term vision, right and they can't do that if they're
• 47:42
  constantly in a like reactionary mode.
• 47:46
  Yeah. I think it's interesting that
• 47:48
  that that's kind of reminds me of what we were talking about
• 47:50
  before on CEOs, right? You're a very good operator.
• 47:53
  You know exactly what you're doing, but another founder in
• 47:57
  your shoes might not make that decision because for so many
• 48:00
  reasons, it sounds wrong, right? But that's the right decision to
• 48:03
  get your team to actually focus, right?
• 48:06
  So, yeah, I think that sometimes exposure to that talent that can
• 48:12
  operate like that can be, can be huge for business, right?
• 48:16
  It's why the role exists. I think focus is very important,
• 48:20
  but also I think that there's a direct correlation between how
• 48:26
  long something should have been done versus when it's done
• 48:29
  versus how and then correlated to like how long it actually
• 48:32
  takes. And so I tend to think that like
• 48:36
  if something can be done quickly, it should be done
• 48:38
  quickly and it shouldn't be pushed off till later because
• 48:47
  that is progress. So like it, I actually think
• 48:52
  that the binary thinking can like make it so that everything
• 48:59
  feels like it has to be this big thing.
• 49:02
  But like if an engineer can do like 3 paper cuts in a day
• 49:10
  versus like chip away at something that might have been
• 49:12
  larger. I mean, depending on where
• 49:15
  you're at with the business, Like if you have like a ton of
• 49:17
  customers that really loved it, the thing that you're doing and
• 49:20
  they want to do something else, I think like serving that
• 49:23
  dopamine loop fast can potentially hot and it can have
• 49:29
  like more impact in terms of like momentum generally than
• 49:33
  like being like, OK, we're only doing this one, this one thing.
• 49:38
  Yeah, sorry, Zach, my my framework, just to be clear, it
• 49:43
  is only useful to do what I'm saying when you find that the
• 49:48
  types of things that people are working on are not leading to
• 49:51
  proper. So like it's a, it is a useful
• 49:55
  tactic when you observe and so like in knows again, I don't
• 50:01
  know the internal workings of no, but like, you know, if
• 50:05
  you're, if you're grappling with how do I push more innovation?
• 50:09
  You have to interrogate your operating process.
• 50:12
  For me, it was like, I like tripled the size of the team in
• 50:15
  a year. And when you do that, like no
• 50:19
  matter what you do, there's going to be places where people
• 50:22
  are working on things that don't make any sense.
• 50:24
  I mean, like it's just going to happen.
• 50:27
  And so like it, I agree with you, I want to be very clear
• 50:32
  about this, but it has to, it is not a bad tool to use when
• 50:36
  you're trying to make, when you're trying to shift something
• 50:39
  about the current operating behavior in the business.
• 50:41
  So I just want to be very clear that it's not, I'm not saying
• 50:44
  that like everybody should operate like this.
• 50:46
  I'm saying you should shift your operation when you want to shift
• 50:49
  your operation. I got ahead.
• 50:58
  Well, good stuff. Thanks Bar.
• 51:00
  Yeah, thanks. Dude, this was wild.
• 51:02
  Yeah. Fun time.
• 51:03
  All right. See you guys for sure.
• 51:04
  You all. Bye.