This AI Startup Idea Has 500 Million Customers Waiting For It
I mean, how many times has someone proposed something? Everyone's like, eh, I don't get it. But then someone else is like, look, what this is really about is blah, blah, blah. And everyone's like, oh, that sounds great. That I want. What you just said, you know, it's not bad information. It's bad presentation.
I made my whole career doing that.
I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off. On the road.
All right, Jason, we're live. This is how we start. We just jump right into it. Can I give the, can I give my like brag about you intro of what I know about you and then you can kind of correct anything that I get wrong? Of course. We have Jason Cohen. So Jason Cohen originally started, you had a bunch of smaller businesses, but in the early 2000s you started, was it called, uh, it's just called SmartBear or SmarterBear?
Just SmartBear. That was 22 years ago, believe it or not.
SmartBear. So 22 years ago you started SmartBear, you grew it for like 7 years. Bootstrapped it, making millions of dollars in profit, sold it. That company now has 1,000+ employees, has sold recently or traded recently for like $2 billion. Is that right?
Yeah, it actually doesn't have that many employees. It's more like hundreds, which is part of why it's impressive, 'cause it's— yeah, it was sold in 2020 for $2 billion and it doesn't have 1,000 employees. It's super profitable. Like, uh, it was publicly said then, um, what the profits were. It's 50% bottom line profit.
God, so just, just a printing, a cash printing machine. Then you started WP Engine, of which I'm a customer of. WP Engine is one of the largest web hosting companies in the world. Uh, that company you bootstrapped for 2 or 3 years. Then you, now you've raised, I think, $200 or $300 million. It makes many hundreds of millions of dollars, is worth billions of dollars. And all along the way, you've been blogging at, uh, asmartbear.com. I've been reading that for years. You are not the loudest person. And that's the reason why I wanted to have you on is because you're not the loudest person, but anyone who's like in the thick of it and trying to build great companies, everyone reads your blog, like the, the, the, the 1%, the 1% read your blog. You've got a really good audience of people actually building it. And the reason I like you is you and Dharmesh are a little bit of the same personality to me. There's like this Venn diagram and it's like, it's like people who are wildly successful, like we're talking billionaire successful., but then also are just do shit just because it's fun. And at the same time have this weird, like, logical way of thinking, but then can like disregard that logical way of thinking and just do what's cool and what's exciting, which is really rare to have someone who's both an engineer, but also understands like, ah, fuck it. I'm just going to do it because this is cool. And you do that. So like, Sean, he just DM'd me on Twitter and I was like, dude, I just got this automated DM from you. He's like, oh yeah, I built this script that automatically DMs everyone who follows me on Twitter. So he's that type of guy where like he's got like 1,000 projects that he will never even talk about, but it's like a little thing that he hacked together on the weekend. But you also have WP Engine, which is this massive unicorn. And so that's why we wanted to have you on the pod.
Well, yeah, I mean, WP Engine's like one of the top 10 web platforms in the world. And then you're also tinkering with like these DM, auto DM scripts, because you're like, yeah, this is useful. I like this. And so that's the, that combo we've, we've come to find is a really good fit with us on the pod. Somebody who has ambition at scale, but also is a tinkerer at heart.
I want to talk to you about some different ideas. So check this out, Sean, uh, on your computer, and Jason, if you have a computer, do this too. Go to zek.app. So it's the word deck but with the Z. So zek.app. Okay, so it says Zek's reimagine how CEOs collaborate with their board. You scroll down. Whose face is that?
Yeah, Ed Norton.
Ed Norton, the actor, is the founder of this company.
That's funny.
He's— I believe he's like, if you Google like this company Zeck and you see like them doing presentations on CNBC and shit like that, he's talking. He's the founder of this company.
Dude, I just booked a demo call in 45 minutes just in case it's Ed Norton who's going to— I just might get a free call with Ed Norton. This might be great. If it's not Ed Norton, I'm immediately hanging up the Zoom.
I saw an interview with him and he said he's super active, but these guys are— they're like, I guess Ed Norton's father, I think, was like a business person and he was raised around business and he, uh, he was, I saw him give this interview and he was like, yeah, the thing about when I work with all these companies I invest in is they're horrible at telling me back the story. They're horrible at giving a presentation. And I, so I just, I wanted to create software that would just help them be better at that, at telling the story, explaining how the company's going and to make our meetings more productive and to teach them how to do presentation. And I think this company, I don't know if it's software yet, I think it's still still a service. I'm not entirely sure. But I saw this site and I was like, what the fuck is Ed Norton doing on this little like software site? But Ed Norton is, this is his company doing it.
And you know, it's not just the experience of the viewer and just wanting people's time to not be wasted, which it also is that, but it's also more compelling. Like if you're trying to propose something, if you do a better job, it's more likely that it'll happen. I mean, how many times has someone proposed something? Everyone's like, eh, I don't get it. But then someone else is like, look, what this is really about is blah, blah, blah. Everyone's like, oh, that sounds great. That I want. What you just said, you know, like what? I mean, that's just bad presentation. It's not bad information. It's bad presentation.
I made my whole career doing that.
Well, yeah, we have like, we have these college, we have these college kids come on once a year, twice a year, and they like pitch their company. And Sean's very good at hearing what they said. He goes, that's actually a great idea. You've explained it horribly. Here's how I would retell that. And he will tell this beautiful story. And then everyone's jaw is dropping and we're like, yeah, we're in. And, uh, he does that all the time. He's very good at that.
You know, we've done pitch competitions at Capital Factory for 15 or 16 years and it always goes like that. So can AI magically fix it all? I don't know about that, but like, could it, could it go from like negative 10 to at least like a 2 out of 10? You know, maybe.
Well, I think you said 3, I thought of 3 interesting things while you were talking. And I think you prompted 3 really interesting ideas. The first is. You're right that most decks are terrible and they're not, and everybody attacks this from a, how do we make the slides fancier? Prezi's like, hey, what if you were hang gliding while you were looking at the slide deck? It's like, no, no, Prezi, just chill out. It's not, that's not what we need. And other people pitch is like, you know what, what if a designer just designed everything? It's like, cool, but the actual message is the part that's out of order, jumbled up and unclear. It's foggy. And that's why this deck is no good. Not because The background color needs to be soft pastel pink. And so you, you start to look at this and one thing that I've done is, uh, whenever somebody on my team makes a presentation, I inevitably will try to like, try to make it better. And the easiest way to make it better is just to ask a couple of questions, right? Like a couple of simple questions. One is like, if people are gonna remember one thing from this presentation, what should it be? What's, what is the number one takeaway? Oh, it's this thing on slide 37. Cool. Let's make that slide 1. And then that thing you want them to take away, let's make that the title, right? Like that, that'll be the title of that slide. And you just sort of go on, you know, you ask like 5 questions and you can make a presentation much better with 5 questions. I've also started using AI in this way. So instead of going to AI and basically go to ChatGPT, instead of asking a question and getting an answer, which I think is how most people use it, I'll go to ChatGPT and I basically say, I'm trying to do X, but I'm not sure where to start. What are some questions? Like, ask me some questions so that I could start thinking about this the right way. It'd be like, well, it seemed like, you know, we did this when we, we did an episode where we were picking a, we did a fake like Stockapalooza. We were picking a stock. It's like, pick one stock that, you know, just like for fun, like we're all horrible stock pickers, but let's do it just for fun. And I went and I, I wrote that. I said, how should I be thinking about this? Like, well, if you're picking a stock, what you wanna do is this, right? And you, you might wanna ask yourself the following questions. What's an area I really know about? What's a thing that I really believe in? What am I looking for? Something short-term or long-term, right? And it asked me a bunch of questions that made me get more clear. And I think if AI was going to do anything, what it wouldn't do is just take my input and make it better. It would actually stop me before I even vomit and it would just say, cool, let's just establish a couple of ground, you know, how long is this supposed to be?
Absolutely. Getting interviewed and getting interviewed by it makes a lot of sense, especially if it has some context of what you're saying. And so the questions can be even more pointed. Another thing I've heard once, which I really like, I haven't used this a lot, but it's neat, which is One thing that AI is good at right now is just giving you the bland, neutral summary of the topic.
Right.
It definitely can do that. So if you ask it for the bland, neutral summary of the topic, it will tell you the most obvious boring stuff. So that's what you don't say. It's like a negative space of like, well, this isn't interesting. Anything that's not this might be interesting. Now maybe that's on you to think of what that is, but maybe there's some like multi-step process where the AI could be like, hmm, okay, I heard all their crap. Now I'm gonna go ask myself what the, the, then I'm gonna go try to find the stuff that they said that's not in there. Then I'm gonna try to enhance that. Then I'm gonna try to build like maybe a multi-step AI could do that. Maybe not. Again, there's a lot of maybes and could haves. I know, but if it were obvious and easy, it wouldn't be a good startup idea. This has to be something, a good startup idea has to be at least somewhat difficult, uh, to pull off. Yeah. So you have a little running start. Anyway, that's interesting. And then the, the second thing is you said about titles. That's a huge pet peeve of mine. I agree completely. People will say, they'll use the title to label what is on the page, which is usually not useful because I can see what's on the page. It should be the message you want them to take from that one slide. That should be the title. So it shouldn't say our team. I can see it's our team 'cause there's 3 heads and there's stuff. Let's just say something like, you know, our team has had 3 successful exits or our team has a collect, you know, collective 30 years of experience is the most boring thing you could say, but at least it's something, you know, like, What is it that you want me to know about the team that's so special? That's what's in the title. Again, AI could prompt or even force that. And it also then helps your, it goes the other way too. Now it helps your narrative. Oh yeah. So I should put on the screen where we all went to college and stuff. I shouldn't read that. I should talk about the title, which says we've had two exits. So I should say, yeah, we exited this thing in this space, this thing in that space, and we work together there. We've been through the trenches. That's why this, this team is totally de-risked in terms of people. Which you don't see every day. So we have plenty of risks, but the team's not one of them. Whoa, that's a good, that's a good thing to say on a team slide to an investor. Investor's like, okay, tick. Like, I, I don't quite believe you that there's no risk, but like, I'm with you. I'm with you. This isn't what I'm gonna lose sleep over it. I love that. Um, you know, that should be the title. So like AI could help and that goes both ways, uh, in, in do it. And if you don't have good titles, you could say, what should, what do you really wanna say here? Oh, let's make a title this long. Okay, now let's go back to the text. This is something you could be prompted for, and any presentation is improved if you do that.
Here's what's funny is that, you know, I have no idea if you are, but you, you might be a billionaire or you're in that realm and you've started multi-billion dollar companies. We asked you about ideas. The idea that you spent most on is on how you manage Twitter. I find that to be hilarious.
Yeah. Well, it's not just Twitter. Like part of what's neat about it is, uh, I, the same tool does LinkedIn and Threads and, uh, and, uh, Mastodon, which isn't, isn't really working, but okay. Here's some stuff I think is, is special. And, and also other people could just do this even manually if you want. So one is, um, there's certain people that I, uh, that I want to have more interactions with. So I have them in a Twitter list because then you can search for it, right?, but I do a search where it's the first people on that list and they've posted in the last 20 minutes, which is a pretty small window. And there might be a couple other things like they have some favorites or I don't know if some, whatever. Okay. And I'll look at that and sometimes there's nothing in it. Sometimes it's just one or two, but I'll try to, if it's relevant to me, then I'll respond somehow. And because it was ju— it just got posted, it's much more likely that they will respond or see it. Also, if it's a good comment, like if I spend time making it really good, then their followers who might see this over the course of the next 10 hours, they may see my comment and upvote it. I may be one of those comments near the top that ends up with a lot of likes and maybe some follows. I've seen times where I have a follow bump because of a reply to someone with a lot of other followers, right? By doing it early, I get that. So if I just scanned everybody, it, that timeframe is important. So it really focuses my attention on that. So I spend almost no time on this and yet I have this big outsized impact of what those, what those are, whether I'm talking to that person or the replies. So that's something you can just take, like my system does that, but you can just take that. The other effect that has, which is funny, is people are like, dude, you're always online. Like I saw Dharmesh post and like, bam, you were there like in 2 minutes. What they don't know is, yeah, but I see like 1/50th of what Dharmesh posts. It's just whenever it happens to be exactly when he posts it, I'll see it. So your perception is quote unquote, I'm always online. But the fact is, no, it's this trick. And so it's like a really funny trick that has that effect.
Why do you care? Why do you care? Because you had this one thing. Well, no, I asked that because you wrote this other thing that I totally agree with. So let me say it this way. I have a bunch of buddies that are very successful. You have no idea who they are. They'll see me get popular on Twitter and they go, hey Sam, can you, uh, can you help me write some tweets? And I'm like, dude, why? Who gives a shit? Like, you're winning. Who cares about this? He goes, I don't know, it seems fun. So I, so I help him write some stuff and every once in a while it'll go viral and they get popular, whatever. And they get addicted to it. And I'm like, dude, don't get addicted to this. You get addicted to the thing you're already doing. That's way better. And you had, you have this post or it was a sentence somewhere in one of your blog posts where you're like, Uh, I actually think that people who have audiences that then launch software products to those audiences, I think that's really dumb because they're actually not going to get that. They're not going to get that many customers.
That doesn't work, but that's not why I'm doing it. I'm not, I'm not launching another product because of social media.
Okay. So then why do you care? So, I mean, when I followed you, I got an automated DM from you. You told me that you built something to do that. Why do you care about building something like this for social media?
It's strictly for fun. Now, what I have done for even longer than WP Engine is write.. And so that is at this point, just a part of who I am. And I get a lot of fulfillment out of it. And like you said, you're like, wow, there's a lot of good stuff here. Um, every time I hear that it feels good. And also it's really just the craft of it. Like I like to try to get the thoughts that I have as clear as possible or as interesting as possible, but there's so much that gets triggered that way. That's useful to me and fun for me too.
And Sam sent me this blog post that you wrote that I loved. Um, and I think it's called Rich vs. King. And this is great because we talk about money and we are honest about the fact that many people get into entrepreneurship because they wanna make a bunch of money. And that's okay. You don't have, you don't have to pretend, you don't have to like lie about that part, which is, I think is, is common unfortunately. But you also built bootstrap companies that enabled a great lifestyle for you and your employees. And so I'm curious, can you explain for people who haven't read the Rich vs. King post, what is the premise of this post? And then how it's played out for you.
I think the key thing that people really like out of it is this, uh, two-box problem that I put near the end that was my final decision of why to sell SmartBear, which is, let's say there's two boxes in front of you, and let's say if you are wealthy, suppose, try to remember when you weren't. In one box, there's $10 million, like period. That's what's in the box. In the second box, which is opaque, there's either $20 million or nothing. And let's just say it's a 50-50 chance of which one it is. And the question is, which box do you want? You have to pick just one. Which one do you want? Well, if you don't have money yet, I mean, almost everyone's going to pick the $10 million for sure because it changes your life permanently. Now you could argue, you know, what kind of lifestyle, blah, blah, blah. But like, that's a life-changing amount of money. Whereas the other one is even more money, but it's Actually not that much more life-changing, and there's a good chance that you won't get it at all. That's silly. This is why when you get offered some money to sell the company, it's often a good idea to take it. Of course it could be big in the future, but if you haven't crossed over to this life-changing amount of money yet, what I was in that post called the freedom line, you could argue how free, how much money. Okay. But when you cross over some sort of line, which maybe you should decide for yourself, it's, it's awfully hard not to take it. Now what's interesting with the box game is if you're a statistician or you're an economist, what you would say is there's no difference between the two boxes because the expected value of both box is $10 million. So they're the same. And my point is, no, they're not. Expected value is not the right way to evaluate the situation. Furthermore, in real life, I said that one box was 50/50. In real life, you don't know what the probabilities are. What's the chance the company will grow and sell and be huge? What's the chance it's stagnant and it doesn't sell? What's the chance that it goes to zero? Like nobody knows. So it's worse than that. It's uncertainty, meaning I don't even know what the probabilities are, much less risky, which means I do know what the probabilities are. So it's actually far worse. So I know, you know, yeah, some people might take the other box. It's okay. You can do whatever you want, obviously, but most people will take that sure thing when it's real money. Now, if it's $10 versus $20, you know, whatever, you might as well take a flyer on $20, 'cause who cares? So the magnitudes relative to your net worth also matter, which I didn't really talk about there in that post because I wasn't getting into that. But that's also true. Is it changing something substantially for you or not is actually a critical question.
So you're a great writer, and there's 2 or 3 great sentences that I like out of this post. It was, uh, you very bluntly, you say, I was always in it for the money, especially in the form of an acquisition. I would tell everyone here, we're here to make money, and if someone offers to buy the company someday, I'm going to sell it. And then you said after you sold it, you go, I have the freedom to work on any project I want for the rest of my life while simultaneously providing for my family. Never again worrying about bills, debt, having a place to sleep, or sending my daughter to any college she wants. And I particularly the, I was always in it for the money. I think that's just great to just be very clear in knowing exactly what you want, uh, in that post. I thought that, I thought that was beautiful how you said that.
Also, it's not incompatible with things like I want our customers to be happy. I want our employees to also make that much money, blah, blah, blah. Like, it's not incompatible with other positive things that you want to do. There's a big difference between I want to make money and do ethical things and create products that actually have value and are not just, uh, middlemen or something like that, or arbitrage. Um, you can say both. In fact, you probably should.
So you wrote that post in '09, I think, originally, and you have this cool graph where you show like there's like a threshold of that matters. In 2023, '24, what's that threshold do you think now? And what do you think it was then?
Well, what's interesting is it's— this is not relative. So at this point, at WP Engine, also we've had a few secondary rounds, which by the way, all employees got to participate in as well. And so now I have enough money that I don't have a line anymore. Like it's okay if I don't make any more money ever again. I really don't care. You know, I don't care like, oh, can I get a jet or not? It's not interesting to me. Just, this is personal, right? Everyone's different when it comes to money or what they want in lifestyle. I have the lifestyle that I want. I don't need more money. So there's no line. Like I just don't, that's not what's motivating or what will make a decision for me anymore.
Well, what about Jason Cohen in '06 when you sold? Like, was there, what was the number where you were like, anything above is gravy? Oh, and that's, that's a threshold for me.
I think then I was thinking like $10 million. I think nowadays it's much more clear that you need something like $20 million. This is all in the US, by the way, to have what would be considered to be like a rich lifestyle in America. 'Cause okay, you know, people say things like, well, I only spend, you know, $80 to $100K a year right now. So if I had $10 million, I could live off of that and you'd be right. But that's not how people are. I mean, I'm not very materialistic and even I wouldn't want to do that. Oh, I'm going to continue to live at that rate forever isn't usually what people want to do. It could be. Again, if that's you, then that's, that's amazing. That's awesome. Perfect. You know what to do. That's not really what happens. So probably more like $20 million, because you have to, you have to, there's a lot of things to do, but you have to think about averages and having a portfolio that's balanced and then taxes and then inflation. And so even 4% of interest taking out per year is actually kind of a lot. Given that you want to maintain it and keep up with inflation, et cetera. And that's where the $20 million sometimes comes from is, you know, 4% of that is like a little under a million after tax. And then you can have quite what you, what anyone in America would consider a rich lifestyle.
I'm happy that you put a number on it.
One thing that I think is cool, we should put this chart up, or the graph on our YouTube channel. So basically it's like, there's like the levels. He's like, You can't afford to lose your job. You know, at some point you're at that level where losing your job would be detrimental to you. Okay, then you can own your own house. Then you can— and he wrote, never look at the right side of a menu, right? So you only look at the dish, you don't look at the price. Uh, never have to work again. And then it's like private jet. And you can see that like it's asymptotic. The, the, the value of the cash is, you know, definitely flattening out the further you go. And so you draw that line and the freedom line basically of like you never have to work again. You could have total total control over your time as like the important threshold.
Yeah, but see, so much also depends on things like, I mean, if you're 26 and you get this offer, um, and you know you do want to work, like you don't want to not work again, that's not what you're going to do. You're going to do something. So it's like, all right, I don't need to never work again, quote unquote. What I would like to— but, but let's say you're burned out, it's been 6 or 7 years, you just want to do something else. And so, well, you know, you do take a ton of money off the table, then you can invest a couple million into your next venture while still keeping a couple million in the bank. And so no, you couldn't live off that for the rest of your life, but you don't want to live off that for the rest of your life. You want enough to self-fund something and do the next thing. And so, I mean, you have to look at the goals, of course, that are in front of you. But certainly you don't want to adopt other people's goals. I mean, I think that's maybe the unspoken other message of the post is what is it that you want and how do you know that? And how do you get that? And if someone else says like, no, you should, you should build a unicorn. Like it doesn't matter what anybody else says.
Yeah. Play your game. So, uh, you know, your blog is basically like a, a gold mine of startup wisdom and I was mining it last night when I was doing my research for this, going back through reading some of the stuff that I liked. And there was a few things I had never read that I actually really, really liked. I wanted to read a couple of these, get you to react to 'em because you had some, okay. Like kind of just nuggets, small, small, short things that I want you to elaborate a little bit on or maybe give an example about just to make it real for people because they rang true to me.
So here's one.
You said all startups are screwed up, including the ones that work. It's just that the ones that work have one or two things that they're excellent at, even though they screwed up a bunch of things that didn't, it didn't kill them. They didn't die. So explain this because I think people have a perception of My business is kind of screwed up. That's maybe why I'm failing. The ones that work, it's all working. It's all good. It's, you know, that there's something different. That's right. Explain that one.
Yeah, it makes sense that that's our perception. Number one, 'cause we all have like some form of imposter syndrome of like somehow everyone else has their shit figured out and we don't. Which of course isn't true, but it makes sense that we all kind of feel that way. The other thing is we see every problem in our business and we only dwell on the problems. Like the things that are going well, we're not spending time on those things 'cause that's not what needs attention, needs fixing. So, you know, we're spending 90% of our time on all the problems, of which there are many. So we feel like we're just drowning in bad things, which we are. That's the truth. Then you look at a competitor or whatever, somebody on TechCrunch, and what are you seeing? Some weird varnished outside, not true version of it where they're super confident and everything's fine, blah, blah, blah. The way I like to say it is whenever you see a company kind of like immediately go outta business, go look at what they posted on their blog the previous week and go look at the last podcast they did. I promise you it was 100% optimism. Everything's going well. We're growing like crazy. We're getting profitable. We're hiring. People are loving. I guarantee it's all that the week before they went bankrupt. That just proves that it's bullshit. Now that doesn't mean everyone's failing or everyone's not failing. It just proves that what you're seeing is definitely not the truth, but you are seeing your truth and dwelling on the bad. So this disparity makes sense. But once you, so, so it's logical, but once you know that, you're like, okay, so it's not like every, it's not true that everyone's public persona is, is the truth. Then the other thing you can do is read the more honest accounts of businesses like Twitter or, you know, Facebook, all this stuff when they were coming up and it's just full of shit.
Like it's just full of stuff all the time.
But what do you see in those things? Not that you should be like Facebook, I'm not saying that, but just as an interesting factor. But what is it about 'em? It's like, well, here's this thing. There was something about connecting people at, on colleges with the faces and the whatever that was just so correct, so good. What we might say now had such good product market fit that despite all of the other problems, it was a raging success. Uh, at Twitter, like this idea that you're posting just the headline of your blog post. Why was that so perfect? I don't know. Maybe no one does. People have theories. It doesn't matter. Point is, It was so compelling that all those other problems just, I mean, there was a fail whale for years, for years they couldn't keep the site up. Something about it, again, maybe I can't put my finger on it, but something about it was so compelling they succeeded despite those obvious public massive multi-year failures. So that's what I mean by like, okay, so everything's screwed up. Okay, different ways, different levels of screwed up, sure, but everything's screwed up.. And if there's those one or two things that are just so compelling, whether it's delighting people or so useful, or it's built into their workflow, there's various reasons why something might be just so good. And I have thoughts on that as well, of course. Um, then, uh, then it, it, you succeed despite those problems. So it doesn't mean those problems are like, okay, and you shouldn't attack them, but it does mean a few things that are very useful. One, emotionally, like, get over it. It's okay. Everyone else screwed up too. Two, you're not gonna fix everything and you don't have to. Because success stories besides like Facebook, blah, blah, blah, but even bootstrap solo companies, that person also does not fix every problem they have. Of course, how could they? There's just not enough hours in the day. So you don't have to fix every problem. Ooh, that's a relief. Then it begs the question, which couple of problems only should I be fixing right now that really are holding me back, that really might lead me to go out of business, that really is hindering my growth the most, that's really why people are canceling the most? You know, these are example things that might be that critical problem or two. Identifying that by answering questions like those, that's what you should do. And you should be seeking what that one or two, you know, critical things are. That's the reason people don't cancel despite that crap. The reason people sign up to buy, the reason they advocate for you on Twitter or review sites. What are they saying in there that's so freaking good? 'Cause whatever that is, you need every, every customer to experience that thing. Like maybe you can change your processes or your features or the onboarding process, whatever, so that more people experience that amazing thing, whatever it is. So identifying those 1 to 3 key things, the 1 to 3 problems, that's what you've gotta do. Then that's where you focus your time, whether you're a solopreneur or whether you're WP Engine, you have 1,200 people. Those are the few things you focus on, on, you know, how do I remove some of those barriers that I actually should? How do I enhance these things that are the thing that's making it work?. And though all the rest of it, you don't want to ignore, you want to do it, you see it, but you must just for capacity. And actually it's okay that you are. And I, and again, I gave you lots of examples of why it is okay in fact that you are. So that's what to do about that.
Dude, I remember I used to host these events and I would have, I would get to, we'd have all these speakers come and they were founders of every startup you've heard of. And I would hang out with them in the green room. With about 6 of them at a time. And it was nothing but complaining and fear. And I remember we had this guy named Alex. Alex started this company called The Athletic. You guys know The Athletic? It's like a subscription sports blog or media company. They eventually sold to New York Times for hundreds of millions of dollars. I was with him, I think on a Friday, and that Wednesday, the Wednesday before, they just released an article saying they'd raised $100 million in funding. Everything was going great, right? And they had this beautiful photo shoot. And he was a ball of stress. And I think he was just kind of venting a little bit to me of saying everything that was going wrong, how he's so frustrated with this and that. And I remember thinking, I'm like, dude, you're in the New York Times like on Wednesday and you had this beautiful photo shoot. Like, it sounds like everything was going great. And he was just, it was just, the reality was that things were going mostly great. Obviously you turned out all right, but he was just complaining so much to me because I was just kind of a sounding board for him. And I remember like thinking after all of these events that I've hosted, that was my major takeaway, which is that the people I admire, they were shit shows just like I was. And that was like kind of a game-changing, kind of mind-altering belief that happened during those events.
I gotta be careful. I gotta be careful asking, how's it going? You know, you never know what you're gonna get.
Yeah, yeah, yeah. Don't ask.
Yeah.
Yeah.
Yeah. I was like, how are you, man? And it was like just bitching constantly. And And I also like, I like, I gotta give these guys respect. I was egging them on. It's not like they were just like bitching to bitch.
I was egging them on. Something does change with scale. So, um, before product market fit, it's obviously you don't know what you're doing yet. That's the whole point. And then you do and you're starting to scale up if you do. Um, then it's just all a shit show, all of it, because everything's growing and weird and no one knows what to do. And, and the things that got you to product market fit are the wrong actions to take when you scale. You're like, all I'm doing is experimenting. Not when you scale, you know what to do. Now you need to do more of it. You need specialists in it. You, So it's a totally different behavior. It becomes more like a tumultuous ocean kind of thing where it's like some things are riding high and fine and some things are not. But it's not true that like 100% of the things are broken. It's just not true anymore because we've had the time and the people and blah, blah, blah to build up to that. And you need to, like as you scale up, you need, it needs to not be a food fight forever. Like it has to mature into something because you can't operate like you were just saying with 1,000 people. That's just complete chaos. So that's, that it can't be.
You had a good quote from the guy from Box, Aaron Levy. He said, he goes, starting up is the act of doing as many jobs as possible to make sure your company doesn't die. And then scaling up is the act of shedding as many jobs as possible to make sure that your company doesn't die, to make sure it survives, right? I think that's very true.
You know, another thing that Aaron Levy specifically said is at any given time, half of the company isn't working. I just don't know which half.
Dude, Aaron Levy doesn't get nearly enough, uh, clout, I think, uh, as he should. So for those listening, Aaron Levy started Box. It's box.com. He started Box, which is, uh, it's like very similar to Dropbox, but enterprise. He started that company when he was like 18, or was it 18? Was he that young? Like he was just out of high school, I think. And he's, and it's now a publicly traded company and he's still the CEO. He's been doing this now for 15 plus years, maybe. That guy does not get nearly enough credit. That guy's the man. We should have that guy on.
Yeah, Aaron, you're welcome on. I have a few other spicy takes I want to get your reaction to because I was like reading this and I was like, oh, I've been guilty of that. Because a lot of your advice, even though WP Engine is this huge company and you could talk about like scaling this big thing, a lot of the stuff that resonated with me was the early stuff. Like the, I don't have product market fit just pulling me yet. You said one thing, you go, Most founders who are doing customer discovery or like that early stage research about an idea, you go, it's just a founder who's in love with their idea, essentially doing like fake sales calls, like just looking for evidence to support their belief. Um, I've definitely done that. I'm sure, Sam, we all have.
That's why it rings true. Cause of course we all have done that.
Yeah. And you ask like the stupidest question ever, which is like, does this interest you? Would you buy this?
You know what I mean?
Pretty good, right?
Useless question.
Yeah. Yeah. You're into this, aren't you? Yeah, you just ask these like leading dumb questions.
You have another one I think is pretty good. You go, sell more value, not more time. Customers don't value their time. They do crazy things to save $2. Don't sell them time because they don't even value it. Sell them more value.
Yeah, that's especially true in consumer. Consumers really don't value their time. But even in business, that's true. And so like a classic example is if you, you could have a product, let's say, that makes it less expensive to get marketing leads. And so you could say this halves your cost because it does. But what are you going to do with the money? They might just save it. It's possible. What they could do is buy more leads. So it also could, you could say the same thing is double your leads. So that's the same thing, half your costs or double your leads, same product. But how much will they pay for halving the cost? I will pay some percentage of the cost that I saved. 25%. That's actually kind of high. Usually people won't pay quite that much. They should, they should pay up to 80%, you know, because why not? But that's not really how people think about it. So you could, you could maybe charge 25% of the cost you save. But if you say double the leads, what will they pay? What were they paying now for leads? A lot. What will they pay to double the leads? The same amount. They'll pay 100% more to double the leads 'cause they are already willing to pay that for leads. They're, as demonstrated by, they're doing it right now. So it's a difference between 25% of one half of their spend, which is an eighth, or 100% of their spend, same product. So it's just now, now yes, that's idealized and so forth, but it just goes to show saving money, saving time, it's not a bad proposition. But often the same product can be shown to generate value instead of saving time. And all of a sudden it's literally an order of magnitude more valuable. Now you could take all of that in price, but as a, a quote that I took from Michael Mauboussin, who's amazing in finance, but startup folks haven't heard of him. He has this great thing about this, which is the thing to do. I'm paraphrasing, but the thing to do is to generate customer as much value as you can for the customer and then decide how to split it with them. So you could split it with them by charging more. You could split it with them by higher retention. They just love you and they stay. They're getting so much value or getting new customers or advocacy. They love you so much. They talk like, these are all ways to get value. Harder to measure than price. I grant you that, but they're, they're very real. It's very real in terms of their healthier business and the risk and the growth, like very real and all those things. So, um, of course that's a, that's a, Something of a subjective statement, I get that, but nevertheless, it's really useful to think first, generate a lot of value, then think, now how do I split that with the customer? Whether that's some price, some not, and if so, even if it is price, how am I positioning that with them as in more value versus less, saving money or less cost or less time, something like that.
The only way that this story not ends, but the exit, you guys have to take this public, right?
There's a variety of things you can do when you're our size. One is going public. One is another PE firm. Another one is getting purchased by a sufficiently large company, either directly or due to another investment, which again could either be a private thing like PE, or they might be on the public markets and therefore have a stock sale or something like that.
You wouldn't want that though, right?
So the way I think you should build a good company is you want optionality, the ability to sell and at good terms, but not have to. The ability to raise more money at good terms, but not have to. Right? The ability to go public, but not have to. Like optionality is power. So how do you do that? You build a good company in the usual ways. A company that's growing and is profitable and the employees are happy as evidenced by they stay and customers are happy as evidenced by they stay. You know, like these very obvious things of like what's a good company. You do that and that maximizes your options because you have— because it's good and therefore you're in the driver's seat. That's what I've said all along and still believe this very day. That's the right thing for us to do, is that.
Can I ask you one quick question as we wrap up? We talked about, um, TKO. Sean and I both love them, but this was the— we were talking about stocks. He picked the company that owns UFC and WWE. Uh, TKO is, uh, I don't know, majority minority owned, or, you know, one of the brainchilds behind TKO is Silver Lake Partners and their CEO, I think his name is Egon Durbin. Is that how you say his name? I was looking him up the other day. Real fascinating guy. Does he sit on your board? Is that right?
Did I see that? No, no, no. There's, there's, um, we have several people from Silver Lake on the board. Um, really impressive, interesting people who have really helped the company.
Yeah. What are those guys like?
Um, On the finance side, it's just this level above what you would ever see otherwise, right? Because in finance you either go to Wall Street to make a lot of money or you could do PE, but like this is the cream of the crop. Like they have, you know, the, you know, valedictorian from Wharton doing like spreadsheets, right? So, and that, and then it goes on from there. So it's just like this amazing analysis and insight into things. Plus of course they see a lot of different companies so they can bring a lot of like This is happening to a lot of our companies now, that sort of thing. Another thing I'll say that's special is you, you think PE and you think, okay, well they just take the companies apart and don't care. And of course there are those kinds of PE that, that absolutely exist. So that, that reputation is earned with Silver Lake though, that's not the case. That's not the reputation they have. So when you have a, a, an investor who on the one hand, sure, they can, they can do all the cutthroat stuff. They're capable of all of it., but also they have that sort of a view on what is product, what is success, how do you build value. That's incredible. So, so Silver Lake has been really amazing, but obviously it, it, there are two things. One is a lot of firms aren't like that. The other thing is it depends on the person. If a different set of people on the board, we'd have a different experience. And that's true of all investors everywhere. So, uh, a lot of times people are like, should I, should I raise money from X where X is some venture firm? And the answer's always, Who at X? Because the firm is, is, there is something, because there's a culture and there's an attitude. It's not nothing. It's not nothing. But the number one thing is who at the firm. That's what makes all the difference. And unfortunately, that can change.
Well, we appreciate you doing this, man. Jason Cohen, a smart bear on Twitter, a smart bear, uh, on a smartbear.com, your blog. It's the best, man. You're the man. We appreciate this.
This is fun.
That's the pod.
I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's travel, never looking back.