He Built The Revenue Engines for Google, Facebook & Square

The one thing I think that's going to be truly future proof is judgment. Why?

Because you have the big challenge of AI slop. Every product leader I've talked

slop. Every product leader I've talked to is extremely worried that because you have these engines running rampant, they're just going to produce lots of code. In an era when you can do

code. In an era when you can do everything, the question is which of these things matter and you should truly do.

I thought an interesting place to start would be the changing nature of how people are building products. The

biggest story by far in technology seems to be cla or claude co-work as well. The

ease with which both technical and non-technical people are able to build something that they can imagine. It

seems to have been just a complete explosion in their ability to do so.

You've built a million things. You've

invested in 700 companies watching people build things. You're about as prolific as they come as a product person. Maybe just give us your sort of

person. Maybe just give us your sort of state of the union of how the world feels to you in terms of technologists building products and how fast that's changing.

>> What was interesting about product development is uh that 10 years ago or even 5 years ago there were very clearly defined roles. Product managers

defined roles. Product managers articulated what to build, designers designed it and engineers built it. Over

the last few weeks, over the last few months, I've been talking to many companies, but over the last two months in particular, December and January, December 25 and Jan 26, it's become very clear that something has fundamentally

changed. And what that thing is is the

changed. And what that thing is is the notion of a long horizon, a longunning agent. I've experienced it myself about

agent. I've experienced it myself about 6 months ago. I tried to use clot code in the early days to build something. I

call it a video transcription tool. So,

I tried to build it. It kept failing and then I had to go in and try to debug it.

Ultimately, I gave up. Two weeks ago, while watching some episode of some TV show, in one hour I was able to basically prompt my way to a good video transcription tool because these agents

now are resilient to failure. You and

you don't have to be very technical to use them. This changes the expectation

use them. This changes the expectation of product teams. After I did that, I started talking to three kinds of companies. One, portfolio companies,

companies. One, portfolio companies, portfolio CEOs of companies I've invested in. Second, the large AI labs.

invested in. Second, the large AI labs.

and third a bunch of AI native young companies to see what the similarities are between them. So there are few a few things that emerge. First product

development as we know it is changing because the models and the capabilities are growing so fast that if you try to be very u strict and stringent about

exact describing exactly what you're going to build or prescribing what you're going to build it is going to not work. So almost everybody has gone to a

work. So almost everybody has gone to a bottoms up approach where it's not driven by product management anymore.

Product managers the only thing they do now is they articulate what the customer needs are at the highest level and then they are the guardian of the why. But

the actual product is built bottoms up by engineers, researchers and product managers and designers all working together on the code itself. So

capabilities and models are changing very fast. If whatever you think of 6

very fast. If whatever you think of 6 months ago, if you continue thinking on that dimension, you have fallen behind.

So it's very very important for the product managers to be understanding of what these models are capable of and to be hands-on. So they sit with the

be hands-on. So they sit with the engineers and the researchers and write code, do prototypes, do anything and everything it needs in a hands-on way.

So the first thing we are seeing now happen is that PMs are starting to check in code with either codec cloud code or whatever into the actual production repository. uh right now engineers have

repository. uh right now engineers have to review the code but you're going to soon see that clot codeex and other tools actually review the code itself before engineers commit all the companies are struggling with how to

evaluate these people earlier there there was nothing called the prototyping interview now there's explicit interview in the interview loop called prototyping literally forces product managers to be

hands-on second the product manager and designer role are merging increasingly so the designer role is an interesting role in particular a lot companies are going through headcount allocation this

year and I'm hearing from many teams that when given the choice between an extra designer and extra engineer they're saying you know what the design systems are already laid out now that we have the design system already laid out

we can use AI to do work around these design systems so we need maybe a small number of designers at the company level to manage the design systems and the design language but AI can leverage the

design language to do designs so please give us an extra engineer so the number of designers and product managers number of engineers when I is growing up in product. It used to be 1 to 3 or 1 to

product. It used to be 1 to 3 or 1 to 10. It's going to 1 to 20 now. And then

10. It's going to 1 to 20 now. And then

I think the other very very important thing that's happened which is fundamentally different is when I was growing up products were deterministic.

There was a workflow you knew if X happened and a user did X Y happened. It

was very clear when you did X Y happened. Today you could do X Y

happened. Today you could do X Y happens. But if you do slight variation

happens. But if you do slight variation of X completely something completely different happens. Non-deterministic

different happens. Non-deterministic software. What that means is you have to

software. What that means is you have to be on the other side an evaluation or what is called evals in AI and someone has to evaluate whether or not what the software is producing is reasonable or

not across various use cases. Obviously

they can be human evals, AI evals etc. But who owns the evals? It's the PMs. It's the PMs and the researchers. So the

PM's job is to be very clear at a high level about what the user needs are and then have a very clear sense of whether this product is good to ship or not by evaluating it. So you've got to actually

evaluating it. So you've got to actually to evaluate it many times you got to write AI yourself to evaluate the results of AI because humans can't. So

PMs are very good at coming up with evaluation techniques. So it's the

evaluation techniques. So it's the non-determinism of software the speed of which things are going and overall the notion that these things are just the capability frontier is being pushed out

every two months makes it an incredibly challenging yet incredibly exciting time of product developer. If you think about uh my friend Zach has this great way of thinking about AI which is we had the industrial revolution for goods and that

basically this kicks off an industrial revolution for services. This is an interesting opportunity to ask about what your philosophy of product is. Um

you're such a product ccentric person and builder that's that we that's what you've done that's what you've invested in. As we face down this like industrial

in. As we face down this like industrial revolution for services what what is your like broadest possible philosophy of product as we enter this era?

>> Very simple. A product person or product manager if you call them their job is to balance customer needs and business needs. The product manager there has to

needs. The product manager there has to be somebody at the company who's the keeper of the why. Why are we building it? What customer need are we solving?

it? What customer need are we solving?

Why is this a pain point? How intense is it? How deep it is? And second, how does

it? How deep it is? And second, how does this add value to the company? If you

build this thing, solving this customer need, how does value add to the company?

And I think balancing those two is a very delicate act. You can build something amazing that adds a tremendous amount of value to the customer but doesn't build any value to the business.

And you can do something that is awesome for the business by raising prices but is value detracting for the customer. So

balancing customer needs and business needs at the highest level is what I think of the product. And what it comes down to in my opinion over the last 10 or 15 years I've really gone down to

this notion of outcomes. Outcomes I

think are what define the best product people and outcomes have to be defined in the form of customer behavior. I

strongly believe that the be because customer behaviors are leading indicators for every business outcomes.

If you think about it, the simplest thing that a product does is to make somebody go from not a customer state to becoming a customer state and from becoming a customer state to becoming a loyal customer and then maybe to

becoming a loyal customer to become a paying customer. So there are all these

paying customer. So there are all these different product states or if you do a poor job they can go from becoming a loyal customer to becoming a churned customer. So these are all behaviors.

customer. So these are all behaviors.

Everything you do or build should be attuned to the goal of what customer state change does it lead to? What

customer behavior change does it lead to? So I tell every CEO I meet that is

to? So I tell every CEO I meet that is trying to hire their first PM or doing their first product review, you need to ask why. The only question you need to

ask why. The only question you need to ask is why. Why are you launching this feature? And you should not let any

feature? And you should not let any feature go out if there's not a clear hypothesis behind this feature. And the

hypothesis has to be articulated in the form of a customer behavior change. We

we believe that by launching this thing the customers will go from doing X to doing Y or from spending X minutes a month doing this to Y minutes a month doing this. You have to have a

doing this. You have to have a hypothesis which is grounded in some data or some something you know about the customer, some secret about the customer. You mentioned at the start the

customer. You mentioned at the start the difference between the video transcription tool six months ago versus you know more recently and how quickly that changed. It's just such a hard

that changed. It's just such a hard future to uh reason about given the pace of change. So how do you reason about

of change. So how do you reason about it? Like is there anything that can be

it? Like is there anything that can be truly futurep proof?

>> Yes. The one thing I think that's going to be truly future proof is judgment.

Why? Because what is the biggest challenge you have when you have thousand AI engineers writing code? You

have the big challenge of AI slop. Every

product leader I've talked to is extremely worried that because you have these engines running rampant, they're just going to produce lots of code.

Which of this code is even valuable?

Which of these are even valuable? When

in an era when you can do everything, the question is which of these things matter and you should truly do on the product side is judgment around what needs to be built and evaluating the output. on the engineer side is

output. on the engineer side is evaluating the code because if you don't understand what the code says I think you can have engineers writing AI engineers writing beautiful code that

could be wrong that could have bugs in it that could be vulnerable someone needs to review it and make sure you have to have human review at some point especially a critical code that is in

the core of your system and similarly in design you have to have judgment around does this make sense does it make sense in the broader design system so I think judgment is the number one thing that

humans are going to bring in an era of infinite productivity. The question is

infinite productivity. The question is what are the things to be productive on and are we building the right things?

>> As you evaluate companies today, build things yourself and just think about this problem and the trajectory of these tools. Maybe walk through how someone

tools. Maybe walk through how someone should think about building an AI application like if if there's so many people excited about it feels like a gold rush with this new technology. so

many things that we can do that we couldn't do before or things that people specific people couldn't do because they weren't technical that they can now do how should people think about attacking building something new an application

using AI starting today >> first and foremost it has to be a deep and compelling problem the good news is there's a tremendous number of deep and compelling problems today in every vertical in every industry why because

till today till recently software was used more as a tool by people by humans we finally have software that is agentic in nature which means it can do the job

of people. So the the question you have

of people. So the the question you have to ask is where are what industry are there roles of people that are highly paid that are doing somewhat of a repetitive job and that can be done by

software. Every 3 months the answer gets

software. Every 3 months the answer gets deeper and deeper. You couldn't have told me that a designer's job could be automated by AI like 6 months or 9 months ago. You couldn't have told me

months ago. You couldn't have told me that an architect's job could be automated by AI. a lawyer's job could you auto? It turns out increasingly in

you auto? It turns out increasingly in every vertical these capabilities are getting better and better. So you want to start with first and foremost what industry do you want to be in and what

kind of job do you want to do. Second

you want to target a high value workflow. You want to target a workflow

workflow. You want to target a workflow uh a way of working that is deep that is complex and that is u that is basically

uh that that requires custom data. I met

with the CIO of a fortune 500 company a few weeks ago. I think one of the challenges with this with this whole space is that the models are becoming so good that if you try to build a company

that is light that is not a hard problem the foundation model companies are going to eat you. So this CIO that I met at this company said I I was asking him over a few startups I had invested in

and worked with. He said look I don't know why I would use any of these startups. Gemini has an agent builder

startups. Gemini has an agent builder product and I also use Chad GDP enterprise and they also have an agent builder product and I have a thousand IT engineers who work for me.

>> They all want to be retrained as AI engineers.

>> So I'm just going to put them using these horizontal tools to build my AI agents. Why do you need any startups?

agents. Why do you need any startups?

And so that's the kind of thing you're going to face that if the CIO of a company of your target customer can build what you're building these agent building tools, you're not going to be

successful. So you've got to really go

successful. So you've got to really go one step ahead of what can be built a multiple steps ahead and you got to extrapolate to where can the capabilities of these agent building products go and you got to do something

very very different. So what that means is you've got to have an you got to have durability because ultimately as venture capitalists are or even as an entrepreneur your time horizon can't be building something that lasts for one

year and that's the biggest challenge.

It's not building an application. It's

building an application that's durable that basically will last a test of time.

And I think there are a few things around durability. One, you need to have

around durability. One, you need to have ownership of a scarce asset. Uh a scarce asset could be it could be a license of some kind. It could be a a regulation of

some kind. It could be a a regulation of some kind where you have unique insight into it. Second, you might need to you

into it. Second, you might need to you might basically own a control point. A

control point is a thing that controls how people interact with money or with data. So if you you want to own that.

data. So if you you want to own that.

Third, you want to maybe have hardware which is hard to replace. Fourth, maybe

you want to be part of an essential workflow. Fifth, you want to have

workflow. Fifth, you want to have network effects. You want to think about

network effects. You want to think about those things and figure out how after you take on that workflow, you can make it more durable. And finally, I think

your ambition has to be to replace the entire system. In other words,

entire system. In other words, increasingly what is going to happen and I'm seeing this more and more is every vertical has either a legacy or somewhat new what is called a system of record

which is a system where most of the data is stored for that system. For example,

in legal there's a company called Filevine or another company called Cleo.

There's a few of these companies in sales at Salesforce. In in healthcare it's Epic. Now for many years these

it's Epic. Now for many years these companies all had APIs that if you enter that industry you could build an agent company on top of these APIs.

In 2025 things changed. These companies

started seeing that these agent companies, AI companies that are being built, they are starting to take on the functionality out of these companies and are treating them like a dumb database.

So you started seeing last year that these companies are cutting off access to APIs. Slack has done it most

to APIs. Slack has done it most publicly. Slack is owned by Salesforce.

publicly. Slack is owned by Salesforce.

They cut off access to Glean where Glean can no longer access Slack data. And the

reason is they don't want Glean to build on top of them and then slowly suck out the value that Slack has. And I'm

hearing from other verticals that they're doing one of three things.

They're blocking access to APIs. They're

offering their own agents for free bundled or they're charging these AI agent companies to access the data. Let

just to access data. The API was free.

They're saying now it's like $2 an API call or something like that. So they're

basically making they're trying to make the model of these agent companies unviable. I think it's going to be very

unviable. I think it's going to be very hard for a end customer to use multiple companies where you have a system of record and then you have this agent that sometimes doesn't work with it properly.

So the agent companies have no option but to also start building and offering a system of record. So every company I know is now trying to figure out how do I build the entire platform and not just

a system that does some workflows. I

think last year everyone was like, "Oh, we can do workflows. We can build what is called the system of action uh and live on top of the system of record." I

don't think that's an option anymore.

>> The Slack example is a good one of uh a sort of last generation software company which was very big and very successful.

One of the most interesting investor questions and I'm curious for your answer from the perspective of a builder and a technologist is that uh the degree to which these horizontal model companies are going to destroy or be

very bad for old software companies because over time it will be trivial to spin up your own Slack that has features that you want for your company and it's very reliable in all the same ways that

Slack is and therefore Slack's in a lot of trouble. How do you think about that

of trouble. How do you think about that question of like obviously public markets seem to think software is in a lot of trouble. The multiples are really really low. How much would you be

really low. How much would you be worried if you ran like a good solid but older software company today?

>> There are two or three kinds of software companies. I think the the software

companies. I think the the software companies that are should be the most worried right now is where they are pricing the product based on utility.

Zenesk is a good example where literally Zenesk prices seats and each seat comes with utility. In other words, each seat

with utility. In other words, each seat corresponds to a customer service agent that tax certain number of customer tickets. So that company should be

tickets. So that company should be worried. Why? Because I can have an AI

worried. Why? Because I can have an AI agent sit right next to Zenesk and you can slowly siphon off. You can use instead of paying for 50 Zenesk seats, you can pay for 20 and I can have 30 AI

agents sitting next to Zenesk and that siphoning can hap happen over time. You

don't have to have a all-in-one decision. It can be a two-way door

decision. It can be a two-way door decision. Those are the most endangered

decision. Those are the most endangered companies in my opinion. You need to change your pricing model to be based on outcome and you need to actually build the product to be based on outcome. It's

easier said than done because literally you're going from a 20 or $30 per seat to maybe charging a buck or 50 cents or 20 cents per ticket result and you don't know how that's going to turn out. So

you've got to change your pricing model and I think that's a very challenging thing. That's why I think many of them

thing. That's why I think many of them probably need to go private because they have to make this business model transformation in private. I think it's going to be hard for them to stay public. The companies that are less

public. The companies that are less exposed are ones where the utility is not based on seats but it's based on data that has been collected and captured over a period of time and the

the more uh timeless the data is the more protected they are. Slack for

example I would say might be in a little bit more precarious state because the data in Slack is half time halfife is very short that's a great way of putting it but if you have ERP is a great

example somebody uses Netswuite as a ERP now I don't know if how Netswuite actually charges but it doesn't matter however many seats you buy the reality is it runs your whole business and there is no compelling reason for someone to

put their career at stake by ripping out Netswuite I know there's a lot of now over the last year there's been a lot of AI enabled ERP businesses but there's There's no compelling reason to take Netswuite and say I'm going to rip it

out because it is career limiting to suddenly take Netswuite out when you're a company running on Netswuite. So I

think those companies are much more insulated and I think obviously and you could argue that Netswuite has more time to build AI agents on top of it because they have the data they have data and

they can train the AI agent on top of it and bundle it. So you could essentially I think the software public markets are not distinguished between these two types of companies. Companies where the half level data is low and where you can

actually have you can literally take half of the value of this company and put it onto an AI company that sits next to it. Well something like an ERP system

to it. Well something like an ERP system or even Salesforce for sales data and records those are real customer records.

It's going to be hard. So what are AI native companies doing? The first thing you've got to do if you ever have to compete against them is you got to spend a year or two first building a system

that literally takes migrates your Salesforce instance to your own company's platform. One of the one of my

company's platform. One of the one of my companies is Na native company. They

literally hired engineers in a European Eastern European country for 2 years to build this migration thing transition tool. So you have to build the migration

tool. So you have to build the migration tool because >> who's going to migrate it? you can just present your spanking new system but this data is still there even for square for a small business I remember they had a point of sale they wouldn't they

wouldn't move to us even though it was cheaper because they had gift cards customer data loyalty data payments data all of that you know even credit cards so we had to build scripts and and that

took us months or years to build it for a simple POS for something like Salesforce you can't just say well here I am I'm a great I'm a much better CRM because I connect there is this thesis

which I completely agree with that if you look at CRM what does a CRM contain?

It contains your customer record. Your

customer support system contains what your customers are complaining about and Jira or Atlacian contains what your product development team is building.

Now all of these things should be linked right because there is no linkage. You

you should be building the biggest you should be addressing the biggest complaints of your customers which are in Zenesk and you should those Zen customers you should know where they came from who bought them who sold them what the AM is. So all these three c

three systems should be linked together but they're all three different companies. So they're companies that are

companies. So they're companies that are trying to unify these things and it's a great value prop but guess what none of your customers is ever going to move unless you build a simple seamless way

to take the Salesforce data and move it to your instance. the data from GM move to your instance the Zender data move to your instance. So literally it's a

your instance. So literally it's a two-year effort to build migration otherwise you've got to get Accenture.

>> How do you think about um stickiness in this era just as a general concept when the friction for creators to build something net new is so easy is so low you can do whatever you want really

fast. How do you how's anyone going to

fast. How do you how's anyone going to use anything for a long period of time?

>> The age of AI stickiness I think comes from a few sources. I think you need to have network effects. So Door Dash is sticky not just because it has this beautiful app, but it's because it's a

network of restaurants and dashers and consumers. So you can't just attack one,

consumers. So you can't just attack one, you've got to go, >> you can't vibe code your way to those two.

>> Exactly. And so network effects. Uh

second u second example of stickiness is when you have financial or money moving through you. I think that's another way

through you. I think that's another way to be sticky. I think uh many of the system of records I think like for example toast have payments going through them and I think that really is interesting because you can't just start

building the point of sale you also have to have money flowing through it and I think uh if you look at the banks banks are a good example a business bank once you have something like mercury as a

business bank it is hard you have money flowing through it is hard to then switch because you have regulations other stuff embedded so I like things that are combination of financial services and software because of That

the third stickiness is from hardware.

You can actually have hardware. Toast is

a good example where toast gives you hardware for free but if you try to give return the hardware you have to pay them. But either case the hardware is

them. But either case the hardware is there and somebody can't just build software. They also have to take

software. They also have to take hardware and put it into the thing and rip out the toast hardware. The fourth

one is uh access to a uh unique asset.

Uh, and I I was thinking about a good example and I came up with the example of Sierra, which I think the unique asset is Brett Taylor. I mean, they have full control of Brett, who's one of the best salespeople, chairman of Open AI.

He can make a call to any company, any country, and they'll take his call. You

can't really outsell Brett. And so, I think there's alpha in that. And so, I think there are, you need one of these four or five things which are basically indicators of durability. The halflife

of software today is so short that unless you're one of these things that make it durable. Harrison Helmer has this thing called uh seven powers. And

so you got to have a few of those seven powers that that basically are embedded in the business model from day one.

>> You you've been so lucky to work for some of the most well-known CEOs and founders of this sort of modern era. I'd

love the chance to ask you a little bit about each of them and what you learned from them and then more generally just things you've learned about what great leaders do to run companies. Maybe going

back all the way back to Google and starting with Larry, Larry and Sergey, what what did you learn from watching them operate and lead?

>> Yeah. One of the most interesting things about all the leaders that I've worked with which I think have built generational companies is that they have a superpower that is very aligned with what the company needs to succeed. And

the company was really shaped in their image. the company, the culture, the

image. the company, the culture, the early hires, the products. When I joined Google, I joined Google in 2003 January.

The first product I got exposed to actually which I didn't know about was a product called Caribou. Caribou was an internal code name for a product that was launched on April 1st, 2003.

Publicly, it was called Gmail.

>> I I I didn't believe that this product existed because in the internal alpha, it said this gives you 1 GBTE of storage. Back then, remember, Yahoo mail

storage. Back then, remember, Yahoo mail was the dominant product and it gave 10 megabytes of storage. So this thing had 100x more storage and this really epitomizes Larry and Sergey's philosophy

which was basically built the best technology on the planet. They were

deeply technical and every product was held to technology and scale and I'll never forget AdSense was the fastest growing product in Google history and we

went in to reviews and Larry would be disappointed in us and we asked why.

It's like what percentage of all ads on the internet are you be like like less than 1%. His goal was not to again he

than 1%. His goal was not to again he didn't care about the revenue. He cared

that Google is involved in serving every single ad on the planet versus like making a making a business of like whatever billion or two billion or 10

billion. So the focus on scale and the

billion. So the focus on scale and the focus on technological superiority and that investment Google Street View I mean and and basically TPUs

uh Whimo all of these I think show the 10 plus years of investment to an uncertain future but knowing that if you invest in technology good things are going to happen and good things happen

but it took a decade and that's investing in technology capabilities.

Before we leave Google, um you had this interesting idea about communication and Eric Schmidt obviously another key Google person. Can you talk tell the

Google person. Can you talk tell the story about him presenting the company strategy using nothing but images and just like a this is like an interesting example of communication?

>> Yeah, Eric Eric was a I mean I think one of the interesting things I've seen is that the other interesting thing I've seen is that almost every great founder or founding team needs an Eric needs an

Eric figure. If you look at it, Mark

Eric figure. If you look at it, Mark Zuckerberg had Cheryl Sandberg, Jack Dorsey at Keith Reoa and Tony at Door Dash, we had Christopher Payne. So,

everyone had somebody who was complimentary to them and really helped uh you know they they're amazing at say technology and scale. Eric was amazing at bringing a team together leading and

I think Larry and Sea learned a lot from it and Larry of course became CEO after Eric stepped down but Eric was incredible. So uh Eric would give a

incredible. So uh Eric would give a product leader. We would become

product leader. We would become secundered to Eric for uh the weekly strate or the annual strategy planning session. So I did it I think in 2007

session. So I did it I think in 2007 where my job was to go to Eric and say Eric how do you want to present the strategy of the company? He's like well it's very simple. I want you to go and interview each of the folks each of the

different leaders of uh the different teams. There's only one constraint I have. I'm like what is that? You can't

have. I'm like what is that? You can't

use any words to describe what they're doing.

>> I'm like what do you mean you have to use words? Nope. you've got to use only

use words? Nope. you've got to use only images. I'm like, why is that? He's

images. I'm like, why is that? He's

like, people don't remember words. They

remember how things made them feel. And

you can put words in the speaker notes I'll use, but I want you to come up with the most compelling image that that exists for what they're describing to describe. And so it was a crazy thing

describe. And so it was a crazy thing because I never thought of doing a presentation that way. And uh so I went to you know each each of the businesses

adwords, search, YouTube, AdSense and then had to come up with a compelling image that was easily accessible to the whole company yet represented what they did.

>> Do you remember like a specific image like an I'm so interested by this exercise. It seems like potentially

exercise. It seems like potentially productive for anyone to try to jam what they're trying to say into only images.

And so I'm trying to pin down like an image and how you how you arrived at it or >> I think for YouTube it was a graph. It

showed the graph the number of videos that being uploaded every second how it had changed from the time Google brought them to them. So it was not even a graph. It was literally showing this

graph. It was literally showing this incredible hockey stick that happened over the last 18 months and then it it had I think we couldn't even show the numbers. So the the thing had to be

numbers. So the the thing had to be compelling enough that it could just the line would have to be like a U or something like that when it went like that because we just show it like this.

you have to say something 100x or something where you couldn't say that.

So, so we had to show that was the one thing we wanted to show that Google search has gone from being used by small and midsize companies to being used by the largest companies in the planet. We

showed the logo of um of I think they had a very large Fortune or Fortune50 company that they had acquired.

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>> What did you learn from Zuck?

>> Zuck was u and is actually I think the greatest mind on growing building growth and engagement in consu building consumer products broadly. I've seen him

basically sit in a room and critique some a product team would have come in with a very wellthoughtout product uh consumer product flow and he would look at the flows and he'd say

that is not going to be compelling to users that is not something that a user is going to engage to change it to this and you say my god why didn't I see that before so he's very very good at

thinking about how consumer product should be designed to maximize engagement and maximize just growth both is probably the best way to put it. The

second thing he's amazing at is learning by following. When I joined, I was uh my

by following. When I joined, I was uh my task was to lead the ads product team and Zach at that point knew a little bit about ads uh because he had worked with Cheryl quite closely. Cheryl had worked

on ads before. But then within I think about a year he shadowed us. He came to the ads team. He basically sat with us.

He came to many of our meetings and within a year he got to the point where he was generating ideas for the ads team. One of the most foundational ideas

team. One of the most foundational ideas of Facebook ads came from what is called custom audiences. Custom audiences is

custom audiences. Custom audiences is the foundation of most ad systems now is the is the idea that you as an advertiser you want to reach people who

are similar to your customers. So if

you're a bank and you have say 100,000 customers, how can you give this set of customers to your ad platform and say look instead of describing these customers right what do what did before

they would describe their customers I think they are 25 to 34 year old women that's too that's not good enough instead if you can just tell us who your customers are and we can map it to our

users we can then find people similar to them so uploading that data into our system securely early and doing it in a way that doesn't compromise an EPI was

was the key thing and it all came from Zuck. How? Because Mark Pinkers was the

Zuck. How? Because Mark Pinkers was the CEO of Zinga. Zinga was the largest advertiser on Facebook. Zinga basically

wanted to like most gaming companies they were very focused on acquiring Wales.

>> Uh because Wales for any gaming company, casino etc. 80% of all probably all the betting companies 80% of all revenue for any gaming company comes from Wales. So

he was very frustrated at us. We would

do uh these quarterly reviews with Zingo on the ad side because they were large spenders on ads and they would constantly be yelling at us saying we want to get more whales. We were like yeah you're getting users and you it's your idea you need to figure out how to

get whales from your games. What do you want us to do? We can help you acquire users. So he once I think talked to Zuck

users. So he once I think talked to Zuck and Zuck came to us and said why can't they just upload their whales into our system? We know who the whales are. Why

system? We know who the whales are. Why

can't we just find them people similar to those whales? We were like that's interesting but we actually didn't know who the whales were. So they needed to tag it for us who the whales were and and basically we started doing it

similarly. We started finding users

similarly. We started finding users similar to the whales that they had and it worked so well. Then we said why don't we take this approach and use it for other types of customers who we

didn't have data on and it became truly it was a transformative thing for ads and it was all it was all Zuck's idea.

He just has something about connect making connections between disparate domains which is uh pretty pretty amazing and unique. Jack is the I mean he's I think on par with Johnny Iv and

Steve Jobs as in terms of his thinking with design. I understood what good

with design. I understood what good design means. Good design doesn't mean

design means. Good design doesn't mean visually pleasing. It means a a product

visually pleasing. It means a a product that is designed so well that you don't have to give your customers a manual on how to use it. They should be able to see the product and use it. Think about

your point of sale. Every point of sale except Square and things that have copied Square, you have to train a barista still for several days after they join on how to use the point of sale. Square is something you can

sale. Square is something you can download from the app store and start using it as a point of sale to run your business. A category where you have to

business. A category where you have to you have to you have to train somebody for weeks. That's the example of a of a

for weeks. That's the example of a of a good design. He brought that to every

good design. He brought that to every part of the company and removing friction from what is traditionally I mean Square's whole premise was removing friction from small businesses applying

for financial services and that extended to the product that also extended to risk. One of the most interesting things

risk. One of the most interesting things that I didn't realize is that Square at its core is a risk company. when you

apply to a bank for payment processing.

In fact, the company was founded because Jack's co-founder Jim was rejected many many times to accept AMX uh by by banks.

He was a fairly successful glass blower in St. Louis and uh he basically was

in St. Louis and uh he basically was selling two $3,000 glass sculptures to people who would send him checks. So, a

woman called from Panama one day and said, "I want to buy this on his website." He had this beautiful piece of

website." He had this beautiful piece of glass. He said, "Great." They agreed on

glass. He said, "Great." They agreed on the price and she said, "I can you take my credit card number?" So he said, "I don't accept credit cards." So she said, "Sorry, I can't send you your travelers check or check or whatever the case is."

So he lost the sale. And so he went to his friend Jack Dorsey. They had never built hardware. They had never done any

built hardware. They had never done any of that stuff, but they brainstormed and realized that the phone, the iPhone, which had just been released a couple of years ago, had this thing called the

audio jack that basically could be used to uh put a piece of hardware in and process cards. I I can't even imagine

process cards. I I can't even imagine the leaps you have to make to get there.

But the number one thing that they realized is people most of most small business are denied by banks when they apply. Square instead said we are going

apply. Square instead said we are going to accept 95% and but what they did was they put risk at the transaction level.

So they accepted you as a person as a business but then once you started processing transactions they would then run machine learning models and every transaction this transaction risky this is not. shifted the level

is not. shifted the level >> shifted the level and so that kind of lazy but brilliant onboarding is something that characterizes a lot of good thinkers Sergey very similar I've come up with this conclusion when we're

going to launch AdSense in 2003 I I'll never forget this 2003 May was when we were doing our final launch things Sergey was our sponsor he came and sat in the meetings he said what are you guys building here we're like oh you know website publishers are going to

apply from all across the world it's a self-s serve product we have to review them we have to review them and say we should approve them not approve approve them to run AdSense. He's like, why do you need to approve them? We were like, what do you mean? Our ads are going to

we are going to be running ads on on these things. Google ads or ads powered

these things. Google ads or ads powered by Google. You don't want to be on a

by Google. You don't want to be on a porn site or something else. He's like,

why not? We didn't really have good answer to why not. I was like, well, you know, standards or like policies. Okay,

but what if they lie? He was right. What

if they lie? Like I could We had so many people applying with Nike.com, for example. It's true. It was very hard to

example. It's true. It was very hard to know who owns a domain, right? I could

apply with with your domain uh and basically, you know, get accepted. He

was right in some ways. We were just doing it to cover our asses, turns out.

And so he said, "Okill all this." So we had literally spent half of our engineering team building this complex approval system with ops and so on. Ops

are super excited. They hired a lot of people and now you're telling us not to do and instead do it in real time for every page that loads because we had the

JavaScript on it. We know what URL it is. Look at the content at that point.

is. Look at the content at that point.

>> And we were like it's too slow. We won't

be able to look at the content because it's billions of pages. That's fine. Let

it load for 100 times and after 100 impressions if any URL hits 100 impressions then start reviewing it. not

trying to put lots of checks up front, >> but being intentional about where and why. Most things don't even get to the

why. Most things don't even get to the level where you care about. So only do stuff. The same thing happened with

stuff. The same thing happened with click fraud. Click fraud was one of

click fraud. Click fraud was one of these biggest challenges that we faced and where people click on their own ads and make money. How the hell do you solve that? The reality is you don't.

solve that? The reality is you don't.

You just wait and you start understanding what click fraud is and then you solve it. So be reactive and solve it when it needs to be solved at that point versus waiting. So the square

thing was exactly move risk from the business level to a transaction level.

The same with AdSense. Move risk from the publisher level or the you're basically you cannot gate because getting somebody to come to you and sign up is one of the rarest things in history. Someone is coming to you and

history. Someone is coming to you and expressing an interest and you're saying you're going to put 10 different barriers. That's the opposite of self-s

barriers. That's the opposite of self-s serve.

>> So pure self-serve product would never have any reviews of any kind. You're

going to be immediately activated. go on

and we'll do checks in real time based on what you're doing versus banning you or stopping you.

>> You me in both these amazing examples and then you also said that Jack would do this across the company, not just in the product. How would you sum up the

the product. How would you sum up the process of great design that you've observed from the people that are the best at design? What is the what is the thing they're the method that they're going through over and over again as

they apply it to different parts of the company or product?

>> The number one thing I've seen is they try to minimize the number of steps.

Everything should be in one page and you need to cut down things. In fact, Jack called the product manager role product editor. Why? Because he believed rightly

editor. Why? Because he believed rightly so that the role of the product manager is not to add more features. Any of us can look at a product and say here's 10 things you should build. The best fe the best designers, the best product people

edit down things. Similarly, we have 100 features. What are the two things that

features. What are the two things that really matter that will drive the customer outcome? So the best designers

customer outcome? So the best designers really take 10 pages of design and say cut out all the experience. So I think it's the process of editing and this goes to judgment. I think this is in an

AI age humans with amazing judgment which is really editorial capabilities are the ones that are going to do well and thrive.

>> Apparently uh Rick Rubin would say that he wasn't a producer he was a reducer.

>> Great example reducer. I like that.

>> I wonder how that applies also to communication. Um maybe this is a fun

communication. Um maybe this is a fun opportunity to ask you about the format that you've lighted on that a leader can send to his team on a weekly basis. I

think it seems like this idea of reducing and simplifying can be applied in so many ways by great leaders. Talk

about it in terms of communication uh from leadership to a team. One of the things that people especially founders of startups don't realize is initially most startups start with two or three

people and then they go to people who are all sitting in a room together.

Everyone can hear what you're saying.

But as soon as a company goes into I think I call it two rooms where they're not in the same room together. Then you

have to communicate. You have to you have to let people know what's going on.

You have to bring everyone together. And

there are a few artifacts that companies need to start putting into place. One is

a notion of an all hands where I think an all hands it seems cliched but an all hands is actually and it seems unnecessary but even with a 15 20 person company just getting together once a

week um maybe on a Friday or a Monday depending or Thursday and and basically just sharing what people have built have been working on in a way and then having the leader address uh everyone or one of

the leaders address everyone is a great way to get people together. The second

thing is a weekly CEO email. And I think this is a very powerful way for the CEO to get across to the to the team what is on their mind. The best way I think is

uh that I've done myself is during the course of the week, you start jotting down things that you think you want to communicate and then you'd spend Sunday or Saturday, whatever the case may or taking all of those things and adding it

to two or three things that matter that you want to get across. Most businesses

I think can be communicated along three dimensions. Progress, product, business

dimensions. Progress, product, business and team. What's happening on the

and team. What's happening on the product? How is it becoming more

product? How is it becoming more remarkable or serving our customers better? What's happening on the business

better? What's happening on the business side? How are we doing better as a

side? How are we doing better as a business? And then what's happening on

business? And then what's happening on the team front? Who have we added, subtracted? What changes have we made?

subtracted? What changes have we made?

And most importantly, don't be afraid of repetition. Don't be afraid of

repetition. Don't be afraid of repetition because repeating it once, twice, thrice, four times is what people that's when people actually it seeps into their bones. What is the literal format that you do? So you've got three

in your email. What is the structure that you do personally?

>> So the format I've used in the past and what I recommend and what people I've seen now I've seen at least 15 CEOs adopt it and to good effect is three sections. One is called top of mind. So

sections. One is called top of mind. So

this is product, business and team. Like

what is top of mind on the product side, on the business side, on the team side.

Doesn't need to be all three. What's top

of mind for you? What's keeping you up at night? I think this is the thing that

at night? I think this is the thing that literally everyone is hanging on to. I

mean because I remember seeing it from from Jack, from Mark, from Cheryl. I I

think just seeing it put in paper or put in an email is just so powerful. That's

one. The second thing is performance update. I think everyone wants to truly

update. I think everyone wants to truly understand how's the company doing.

How's the company doing on the dimensions, I think. And this is where especially being a startup, I think most people are one dimension removed from how the company is doing. They all want to know that they're doing well. And I

think this is the way. And the third is miscellaneous is things like recognizing specific people. It's quotes from

specific people. It's quotes from customers. It's maybe an off-site

customers. It's maybe an off-site announcement. But the most important

announcement. But the most important section where you should spend 60 or 70% of your time on is top of mind.

>> How transparent should one be in that?

As a leader of a business, I could tell you what's top of mind, but a lot of it either might be sensitive or uh I would worry about scaring people or worrying people about something that I'm thinking

about or worrying about. like what keeps me up at night might create stress in the business. So like where where where

the business. So like where where where should one draw the line in terms of how candid they are about >> I personally think more candid is better than less why but if you're more candid what you can do is you can actually get

people you can actually ask people to suggest ideas and that's the thing I think you by by you just if you have good talent at the company if you actually ask them what do you think I should do what do you think we should do

in this situation I think people will rise up to the occasion especially when the company is small we want people more input and there's a oneway road decision that we're going to make where making it takes us one way or the other. I think

it'd be great to get um get get feedback from more people.

>> I want to talk about ads and um everything you've learned about building like an incredible ads product. You

basically have built like the core business the important core business engine at multiple places at at the sort of main character company across across your career >> as a company. You either die or you live

long enough to become an ads company.

And so we are seeing now with OpenAI it's happening. Now how do you build an

it's happening. Now how do you build an ads business? There are three

ads business? There are three fundamental ways to succeed in the ads business. Three and only three. One, you

business. Three and only three. One, you

need to own a very coveted uh group of users and you need to have a surface on which those users with which those users interact. Google search is a great

interact. Google search is a great example. It's a surface on which a very

example. It's a surface on which a very coveted set of users interact with. U

obviously they express high intent. So

Google is one of the most profitable ad businesses. Facebook very similar. It

businesses. Facebook very similar. It

took us a while to figure out what was coveted of both these users. Turns out

what was committed was the identity. We

knew who these users were and we could match them to customer and other data and so you could precisely target these people with messages you wanted and you could find people similar to them. Chat

GPT their combination of intent and identity data is unparalleled. I mean

Google had intent data but not identity.

Facebook identity but not intent. These

things been both together. I mean it is a it's the dream of any any advertising person. I mean shoot I mean I don't know

person. I mean shoot I mean I don't know how many searches they see but they going to see they're going to see more.

And these are complex complex multi-phase searches, right? That's the

other beautiful thing. You search or you and each of the queries is kind of like a search and then you search again and you're just building up searches. At

Google, you typically search and then you lose the person because they go off and click and you don't hear. These are

like natural language queries ripe for amazing amazing targeting. That's one

way of making money. But you have to own a firstparty product. You have to be the first party. Second, you have to drive

first party. Second, you have to drive outcomes. That's another way of making

outcomes. That's another way of making money where you don't own any inventory but you can drive outcomes for advertisers. The best example of this is

advertisers. The best example of this is a company called Apploving. Apploving is

a 100 plus billion dollar company. They

drive one outcome really well, mobile app installs. And no one believed that

app installs. And no one believed that people would need that many mobile app installs. Turns out everyone wants to

installs. Turns out everyone wants to get mobile app installs. It was

initiated only restricted to gaming. But

now every mobile app where they sold one mobile app installed. So app loving has built a massive infrastructure. Now they

control the buy side, they control the sell side, they even control the middleware. You could argue that they

middleware. You could argue that they kind of control the auction for most mobile apps in a way that almost Google used to control or people say they control for the web. But apploving has

built an amazing engine to deliver mobile app installs at a certain cost.

>> So that's the other way. Second way to do it. You deliver an outcome at a

do it. You deliver an outcome at a certain cost.

The third way to do it is if you are the exclusive provider for a large advertiser or a large source of demand where you become

a good example is a company called the trade desk where Proctor and Gamble for example go to the trade desk and say I spend with Google I spend with Facebook all my other display budget trade desk

here you go you can figure out how to distribute it and how to run it and so those are the three ways but you got to be exclusive so Those are the three ways that you can make money.

>> What business ideas don't work in in advertising? Like what are the business

advertising? Like what are the business models that just are doomed to fail?

>> Trying to be a middleman on top of these large platforms from my understanding work trade desk I know doesn't work on Google or Facebook at all. Doesn't work

with Google or Facebook as a first party, but applovin I think only little bit works on Google and Facebook. Mostly

they do their stuff on the on the unwashed web basically outside. So,

you've got to stay out of Google and Facebook's ecosystems because if you're trying to build your business on top of Google and Facebook or probably soon OpenAI uh as an ad company, you're going

to get squeezed over and you every time you build a new capability on top of Google, turns out Google learns what you're building >> and Google has the best engineers on the planet. So do Facebook, they will take

planet. So do Facebook, they will take your capabilities, incorporate into their platform. There's going to be

their platform. There's going to be almost certainly a cottage industry of companies that are going to come and say, "I'm going to help you optimize ads and chat GPD." There's already companies that help you optimize placement in what

is called these answer engines called AEO instead of SEO. All of those are not going to create durable enduring companies.

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>> What would you be worried about if you were one of these fairly monopolistic owners of a massive ad network like the ones we've discussed?

There Uber and Amazon in the mix, Door Dash, Facebook, Google. If you were there running their ads businesses, what would scare you?

>> Consumer behavior change. Consumer

behavior change where they don't open up the apps anymore, but they use agentic interfaces. They use AI interfaces which

interfaces. They use AI interfaces which are not owned by my company, this company to to do their transactions. If

you assume that a big percentage of things are repeat, then could you put those repeat things on autopilot through an agent and you never open the app and so you lose opportunities to then advertise and so and you lose the

relation with the customer over time because the customers start trusting the AI agent. You can't bury your head in

AI agent. You can't bury your head in the sand. You have to go and experiment.

the sand. You have to go and experiment.

That's why when Chad GPD opened up their apps platform, all of the commerce platforms are experimenting. And the

thing I would look for very carefully is there are going to be early adopters using the app. I'm going to look for obviously they're going to connect their account, their Uber account with the chat GBD account. I'm going to look to

see these people who are connected.

How's their behavior on my app? Are they

going to my app or not?

>> Are they opening my app or not? Are they

opening my app much less frequently?

Because if that's the case, then obviously this experience is so compelling that I would then have an choice to make. How do I make this experience maybe not as compelling as my

app experience or how do I incentivize them here to open up my app?

>> There's a new battle happening for that first category which is a new interface to be owned. We know chat GBT is sort of does I'm curious if you think being the first mover matters to build a new ad network because there's there's Gemini,

there's Anthropic, there's a bunch of people that have tons of users using this new interface. How do you think about the landscape of the new potential entrance to build the next dominant uh

at network? What advice would you give

at network? What advice would you give these various parties?

>> The good news is the being first doesn't matter. Why? because you control

matter. Why? because you control especially if you're in category one which we described you control your first party inventory in fact being second or third you can learn from the iterations and mistakes that the first

one makes your inventory is not going anywhere now some might have more urgency to monetize than others but Gemini doesn't need to monetize anytime soon so they can just sit back they have a lot of ads expertise and data from

Google they can sit back and wait till they need to monetize uh in fact a good strategic move for them might be to say I am I am the zero ad platform like Apple claims or Google can claim that Gemini has no ads in it and there is a

certain set of customers or consumers who care about that. But the biggest thing is I think and and OpenAI has done a good job of articulating this ads should not ads and content ads should not influence the content that is served

to me or the recommendations that AI gives to me. I think they should be they should be relevant and but they should not be um influencing the the recommendations. And second, you have to

recommendations. And second, you have to keep a high bar for engagement and usefulness. Unfortunately, however

usefulness. Unfortunately, however relevant ads are, the reality is that this wasn't proven is that once you start showing ads in an previously unmonetized uh no zero ads uh surface,

engage engagement of users goes down over time. It does because some of the

over time. It does because some of the engagement gets siphoned off by ads and some of it gets siphoned off in different ways. But this many hold out

different ways. But this many hold out groups across many companies have proven this. So the question for any one of

this. So the question for any one of these companies is how much engagement are we willing to take in exchange for monetization. And so I think first you

monetization. And so I think first you need to have a hold out group. I'm sure

they're having it a hold out group of people who never ever see any ads because that's your fresh group that never sees ads and you need to understand that's their behavior. And

then you need to always understand how uh how you know people with ads are behaving and then you need to figure out uh what the engagement hit is from each quantum of ads and you need to then give

your ads team a certain engagement budget and so that's what at at Facebook there was an engagement budget every year that between the newsfeed team and the ads team we had to adhere to. In

other words, uh we yes we wanted this much revenue but it the the check metric on the revenue was we can't take more than x% dip in engagement overall for newsfeed.

>> What are the attributes of a good northstar metric? Like what advice would

northstar metric? Like what advice would you give someone that's trying to pick the thing around which the company is going to optimize?

>> Yeah, the northstar metric is a is a metric that is an indicator of company growth and customer value. So it

actually balances customer value and business value nicely. Nostra metrics in my opinion should not be revenue. It

should be something that is directly correlated with customer value. So for

example, if customers are doing well, the Nostra metric should go up and to the right, but it should also lead in business the business doing well. For

example, for Square, the Nostar metric was GPV, which is volume of payments processed. It was not correlated to re

processed. It was not correlated to re it was somewhat correlated to revenue, but it most importantly showed that the number of the amount of payment processed to the company was continuing to grow. At Facebook, the northstar

to grow. At Facebook, the northstar metric was DA us. It was actually monthly active users. Then it over time went to daily active users because it was a sense it was an indication of how

engaged C users were. Now, one of the most important things about an NSM is that it needs to be coupled with what we call check metrics. In other words, NSTAR metrics if they're left alone can

as you know incentives drive behavior.

So if you tell a team go and optimize this Nstra metric they will do what it is going to go up 100%. But then many things that you don't want to go down could go down. So for example in in the Door Dash case you could say I want to

grow GMV which is the gross merchandising value which is the Nordstar metric. Now GMV is the total

Nordstar metric. Now GMV is the total order of total value of all the orders that go through the marketplace. I could

make it grow up by offering by setting delivery fee to zero by setting everything to zero and what happens then? The company's revenue goes to

then? The company's revenue goes to zero. So you basically want a check

zero. So you basically want a check metric that is maybe a check metric around the health of the customer and a check metric around the health of the company that basically hold this that are the guard rails around this Nstra

metric. So in the case of Door Dash it

metric. So in the case of Door Dash it might be I want to maintain a certain gross margin percentage or I want to maintain a certain customer retention percentage something like that. Again it

might be margin is typically a good one to use because in some ways that is a indicator of the company health.

>> There's these two ideas that we talked about when we first met. One was the need the need for the very best software companies to sort of stand alone in the sense that someone can just go use it without talking to a human and it just

it works for their problem. So like

fully fully self-s serve. Love to hear you talk about that. And a related idea was that's sort of on the builder side.

On the investor side, you mentioned to me that all the great investments that you've had, the companies that have really had like explosive growth have had a high number of one of four qualities which is I think was gross

margins, low cost to acquire the customer. um high retention and a tight

customer. um high retention and a tight sales cycle which maybe match maps back onto the self-s serve thing.

>> Yeah.

>> So talk about the relationship between those two things.

>> The self-s serve notion actually came from Google was Google was the first company I worked at which achieved massive scale and what happened at Google was within the ads team. Uh we

basically had wide number of customers using us the millions of customers using us. There were a lot of small businesses

us. There were a lot of small businesses but there were also large companies.

what we ended up doing to serve the large companies. Large companies didn't

large companies. Large companies didn't want to use the product themselves. They

had uh agencies using it for them on their behalf and they also had internal people at Google support and sales and operations people using them. So on the product side we built a lot of tools for

this internal for our internal colleagues for our sales and operations colleagues to manage the system for our large customers. One day I think we were

large customers. One day I think we were at a Larry review and we were showing these what we called ICS internal customer systems to Larry. I think we we were not meaning to show it but I think to show him a demo we somehow got into

it. He was like what is that? We're like

it. He was like what is that? We're like

well it's a system used by our internal teams. He's like why'd you build it? We

were like well we have to help our large customers. He said I don't want you mean

customers. He said I don't want you mean our small customers don't have access to it. We're like no end it right now. We

it. We're like no end it right now. We

were like what do you mean end it? I

want to make sure that everything you're building for large customers is also available to small customers. And so we basically had to take everything we had

built over years for in this IC system and made it make it available to customers. And turns out an interesting

customers. And turns out an interesting thing happened. Turns out the smaller

thing happened. Turns out the smaller customers adopted it much faster because some of these things we're building had advanced knobs and so on that we didn't think they would use. Turns out the

self-s served customers were the most sophisticated users because if you do something that's interesting, there's all these small agencies, entrepreneurs,

hustlers, all of these folks, they if you can help them make more money, the it's it's a testament to human creativity and ability, they exploit the system in ways that you never you never

even know and you learn a lot from working with them. So I've seen in every case when you open up your system to selfs serve you learn so much more about the capability of your product than if

you basically it's your sales team doing it on their behalf. In fact, I'll never forget in AdSense, I think we had some of the largest publishers in the world sign up and start using us on a self-s

served basis and then we engage with them after that. And I think companies like Atlacian, Square, I think we had Nike, I think start signed up for a uh for a for a Square uh device and and

sell some onboarded and start using in one of their stores. We had I think Whole Foods. So, I think it just changes

Whole Foods. So, I think it just changes it does two things. One, it makes your product better. It makes your product

product better. It makes your product better because these folks they use the product in ways that you don't expect or anticipate and it helps you it forces you because what is the definition of

self-s serve? The definition of self-s

self-s serve? The definition of self-s serve is the customer can onboard not just use but onboard and use the product without ever talking to or engaging with a single member of the employee base at

the company. So when you do that that

the company. So when you do that that means you have to think about how do they actually get set up with the product. So it really puts a lot of

product. So it really puts a lot of effort on onboarding because onboarding is one of those things where most people drop off if you don't do a good job and then you've got to get them to a moment of delight very quickly. All of those

things a large if you're not building a sales product you don't even think about and a seller product you think about it every day. It's like a consumer product

every day. It's like a consumer product or sells a business product. And then

second what it does for you is it opens up the aperture to your customers because with say a 100 salespeople yeah you can reach maybe 10,000 customers but with a self-so product with the right

word of mouth you can reach millions of customers look at cursor for example it is used in every large company I bet only maybe 1% of companies is maybe the

top down motion 99.9% of companies some engineer got it great example is a company is Figma actually after I invested in Figma I joined square one and a half years later I tried to

basically push Figma down top down into the design team because learning design I said you got to use Figma designers refused to use it they're using a tool called sketch and they said we're not going to use it sketch is much better

and so I felt okay it's not my place to tell them what tools to use so I backed off two years later a mid-level design manager came in and they brought in Figma from their prior company and they

basically got got it to be used across and it kicked out sketch so I think with self-s serve you can get into these things where even there's an incumbent But you can infiltrate and be an insurgent in a unique and powerful way

which a sales direct sales motion could never have produced then.

>> One of the other dimensions that's changing fast is careers. I'm curious

what you think about the sorts of people that will thrive best in this new era.

If you're a person hiring someone, what are the sorts of things that you would place extra emphasis on now in the sort of AI era?

>> The number one thing I think is going to be the focus on doing and building. I

think CEOs have gotten too comfortable over time and I think this is changing hiring middle management very very quickly and hiring sea level people instead I think you're going to see the

rise of AI agents doing a lot of work but then humans who manage the AI agents and our IC's so I think what the number one skill that is going to be relevant two years from now probably even one

year from now is to become a functional expert that knows how to build AI agents to do that function and orchestrate an army of AI agents to do that function.

Well, there was a great article the other day I read about an PM at Meta who's non-technical but who basically built a bunch of AI agents to do his job as a PM so well that even his engineers

like teach me how to use a AI agents well. And so I think that's what you

well. And so I think that's what you want. You want somebody who is

want. You want somebody who is essentially acting as a manager but not of humans but of AI agents. And

management has to be a full-time job.

What I mean by that is if you manage three, five, 10 people that's not enough. You either need to be managing

enough. You either need to be managing 50 humans or you need to be an IC. And

so there would there's something called span of control which means how many people you manage in some ways. And so

span of control less than 10 should not be allowed at any company at this point.

I think everyone should have I think a full-time because think about it if you're managing even 15 people maybe you meet with them once a week that's 15 hours. What are you doing for the other

hours. What are you doing for the other 25, 30, 40 hours?

>> You should be working. And on the company side, don't hire managers as long as possible. Hire doers. Hire

builders.

>> How do you what is your favorite way to assess whether or not someone is is that in interviewing them or learning about them?

>> Best way is to give them a work project.

Engineering does a great job.

Engineering has always done a great job.

Every company I've been at, they would have engineering coding interviews, programming interviews.

>> Yeah. Do stuff. Everywhere else you can just BS your way without doing stuff.

You can just talk and talk is not you got to actually do stuff. Produce an art artifact. So at square we established

artifact. So at square we established work projects where even for corp dev I remember corpdeev our our work project was tell me about give me one company that square should buy and analyze the company and tell us why we should buy it

and tell us what the synergy should be.

So the best candidates had to do that.

So every every function needs to have a work project that you need to put them in a room without AI and get them to do the project. Get them to do the work

the project. Get them to do the work that is ideally very similar to the work they're going to do. I we would almost give them for product managers we would take a product we were thinking about and we would just say here's a product

we're thinking about figure it out should we build it. The first and most important thing you want for these kind of thing is especially for customer facing roles they need to take the voice of the customer. In other words, they

need to justify the why. The best PM candidates rejected the premise completely >> and they did it in a beautiful way. They

went and talked to 10 customers on the street. It's so brilliant. They said, "I

street. It's so brilliant. They said, "I talked to 10 customers. I they were all square users, which is so easy. Mint

plaza, you go there and we found that none of them want a pre want this premium insights product. So, we don't build it. We're going to build this

build it. We're going to build this other thing." And said it was amazing.

other thing." And said it was amazing.

That's what you want to see. You want

agency. You don't want people to just say, "Give me what to do and I'll do You want people to reject the premise or question the premise in the first place.

Square should not buy a company. That

would be great. Why? Tell me why. And so

that's the kind of thinking you're looking for.

>> What was Tony's thing?

>> Tony's thing was he would give people either $10 or $20 and ask them to acquire a,000 customers. A,000 customers

for Door Dash consumers. And literally

some people would say, "I'm not going to take this challenge. I'm not ready for it or something." and great that if you literally opt out of it and then some people would take it and the goal nobody even came close to acquiring a thousand

or even 100 I think but the goal was to see how many different things they were able to try in the course of few hours someone went to the gym printed flyers out and gave it out people tried all

kinds of things it it was a brilliant way to just just filter out people who didn't want to do stuff >> is there any other advice that you would give the person building the career we

talked about you know evaluating and and uh be a builder and all these sorts of things. How should one think about

things. How should one think about managing a career in the AI era?

>> Stay at every job long enough to have impact. I have over the last 18 24

impact. I have over the last 18 24 months I've been seeing this phenomenon of job hoppers or job optimizers I call them who stay at a job for 12 to 18 months and then they move to the next

job and then they say 12 to 18 months and move to the next job. I think that that is one of the biggest red flags as a hiring manager that I see because I don't think you can achieve anything of

value. You can't have any impact on a

value. You can't have any impact on a company in 12 to 18 months. I think it takes minimum 3 to four years to have impact on a company. So my top advice is

stay long enough to have an impact, build a network, have fun. Don't from

the moment you start a job, don't be thinking about what my next job is. once

in a while maybe one job it didn't work out uh amongst a series of jobs okay you left it 18 months but if I'm seeing two or three jobs back to back immediate red flag I posted this on X and tons of

managers wrote to me saying it's an immediate red flag so you do a massive disservice and you won't even know the problem is you'll get rejected you won't know what happened it's that people want people who stick around and build who's

going to hire you if they see that's your behavior so I think it's a very shortserving or it's it's a very short-term thinking you got to build something of value and that comes with time.

>> So much of the theme here has been uh identifying a superpower, having one in the first place, evaluating one, matching it to a problem with a leader and so on with your investor hat on and

your new firm marathon. How do you assess the capacity or existence of a superpower in a person? Like what what how have you learned to do that? Well,

>> the most important thing I look for is founder authenticity. If you think about

founder authenticity. If you think about it, three of the four companies I worked with, Google, Facebook and and Door Dash, all started in school, all started in colleges and they all started as a

way to just a toy problem almost that that the founders are curious about and they started with an authentic curiosity. Can this be built and then it

curiosity. Can this be built and then it became it got built and it started and similarly with Jack and Jim, they started solving a real problem. So my

first question to every founder is tell me your founding story. Why did you decide to start this company? And so the founding story in my opinion is what a

lot of it expresses why they chose this problem and ideally it should touch on what the superpower is and what compelled them to work on this problem.

I really I I've had many people work with me or for me who have gone out to start companies with the only reason being well I have my buddy and we both want to start a company together. I

really advise them not to do that because just going out and starting a company because you want to start a company with your friend is the wrong reason. So I want to understand is there

reason. So I want to understand is there an authentic lived experience that they've had in their life that compels them to work on this product. Dylan uh

from Figma, if you talk to him, he's seeped in design. He thinks about the design of things. He thinks about how to make things more compelling and it was very clear that he had a vision for what

this thing would be. And a good example is a company called Fair. It's a B2B marketplace. Max RHS the CEO worked for

marketplace. Max RHS the CEO worked for me at Square. And Max when he left Square he actually tried many different ideas and turns out and none of them were authentic to him and to fair. Turns

out the idea that worked was fair. Why?

Because when he was a undergrad student he had an umbrella company that he created and this umbrella company he was trying to get distribution for it in local retail and it was extremely hard

for a brand. How do you get local retail? There's so many of them. How do

retail? There's so many of them. How do

you go in and pitch to them? So he

realized that that problem is the one he wanted to focus on other manufacturers who wanted to get access to local retail.

>> Are there any other questions that you love to ask in a first meeting learning about a company other than tell me your origin story?

>> I think the other one is idea maze. Tell

me about how you navigated the idea maze. Yes, you want to tackle this

maze. Yes, you want to tackle this problem because again this is a classic product thing. You start with the

product thing. You start with the problem but then there are many different solutions, many different ways to solve it. Why did you choose this solution? Why did you choose this way

solution? Why did you choose this way versus the other way? So I will basically throw try to throw them off course or offkilter by asking them five six other ways to solve the same problem

and ask understand if they are if they are students of either history or their industry to say why this problem why this problem could not be better tackled in this way. So I want to understand

that they have studied alternate approaches historical approach to solve this problem. I think good example is

this problem. I think good example is the Collisons I think bought a book on payments and they studied exactly why all the payments companies did what they did and how they failed and how they succeeded and I think the best founders

are students of history in that industry and they understand why all the prior companies took the decision and ideally they stand on the shoulders of giants they're able to build this company the other thing I always recommend to CEOs

is a board role is like a marriage uh once you get into it it's very hard to get out of so never ever ever invite anyone to join your board before spending at least a year with them.

>> Have them join an advisory board. Have

them meet with everybody in the on the management team. Spend time with them.

management team. Spend time with them.

Have them come to a few board meetings.

Have them meet with the other board members. Come to a board dinner. But

members. Come to a board dinner. But

don't and have three or four people in your advisory board and then make one of them a board member. If you like them, if you feel they're adding value, if your team feels they're adding value, etc. The other thing I've seen with

boards over the last 15 years is the management team getting involved. 15

years ago, it would just be the CEO, the co-founder maybe, and the board. We'd

meet for four or five hours, discuss topics, maybe bring in the management team person for one slice, the CFO, and then they would leave. Now, most

companies, they have the management team attend the entire board meeting, entire board meeting except for what is called the executive session. And I think that is awesome. Why? Because I think

is awesome. Why? Because I think management team and board get to meet each other. As part of a board, you want

each other. As part of a board, you want to understand who's on the management team. Who could be successor to the CEO?

team. Who could be successor to the CEO?

What are the capabilities of different parts of the management team? And then

as the management team, you want the management team to be able to leverage the board for help. I think one of the best practices I've seen done and I've I've now tried to push other companies to do it is a notion of a board buddy.

So everyone on the board should become a buddy to manage team member and and they would then meet with that managing team member uh multiple times between board meetings. So once a month or even text

meetings. So once a month or even text with them and anything they're almost like a sounding board anything the management member has. So that you can see that the different board personas I described they map nicely. So I

generally am the management the buddy for the head of product or the head of engineering. Somebody else is a buddy to

engineering. Somebody else is a buddy to the CFO someone else is the head buddy to the CRO etc etc. So it's a I think the meetings in between the board meetings are actually just as important as a board meeting themselves because

that's when you are cuz a board meeting can there's a lot of things going on.

Yeah. And so but but those relationship that's the other thing I realized it's not the board meeting that truly matters. It's all the things between the

matters. It's all the things between the board meetings that that are the real real thing when things get done. I think

the only thing we haven't talked about in this like grand art of company building and and and product creation is the the job of acquiring the customer,

positioning the product, marketing, the way it sort of presents itself to the outside world. What's the dispatch from

outside world. What's the dispatch from like the cutting edge that you're seeing of how people do this? All these things, position, brand, customer acquisition,

the ways they do that. What does like new excellence look like to you across this the many many companies that you get to see?

>> One of the most interesting things now it's different between enterprise focused and consumer focus. For consumer

focused companies the big thing is how to scale influencers. I think

influencers have become much much much more every year they become much more powerful in how people especially younger people consume products and and even choose products. Somebody said that

Tik Tok is the best local search engine and I think that's right. My kids have discovered crazy when you go traveling, crazy restaurants on Tik Tok that Google Maps would not really show or Yelp doesn't show, etc. So, how do you reach

influencers on Tik Tok? And there's a set of companies that's coming out that's essentially making it easy. The

problem is influencers on Tik Tok obviously there's head influencers, but there's a long tail that go viral for different reasons and you want to capitalize on those viral waves if possible. So there is a set of companies

possible. So there is a set of companies that is building products to see if they can help brands connect with these influencers in scalable ways. On the

enterprise side, I think the most interesting thing I'm seeing it's not really a um acquisition channel as much as it is a u onboarding channel. It is

basically presenting an outcome to customer and saying let's collaborate on outcomes. Palunteer does that very well.

outcomes. Palunteer does that very well.

Palunteer goes to customers and say what's your most important business problem? Oh, here it is. Okay, great.

problem? Oh, here it is. Okay, great.

Give us 6 months to solve it. Engage

with us. If we can't solve it, fire us.

Don't pay us anything. If we solve it, pay us a lot of money. So, it's truly taking ownership. And I think this goes

taking ownership. And I think this goes to outcome based pricing. How your

product is priced and your confidence in your ability to deliver that outcome of course. Um, so I think outcomebased

course. Um, so I think outcomebased selling is I think one of the most interesting ways of changing. And in

fact, I I've one of the top piece of advice I have for founders reaching out to companies is you cannot lead with what your product does anymore. You've

got to lead with what is the outcome you can deliver or ideally even have delivered. I'll never forget this uh

delivered. I'll never forget this uh this example and what is crazy is that companies always look to other companies in the vertical. This never will change.

So for example, if you get JP Morgan to use your product, I promise you every single bank will then evaluate your product. But if you get Proctor and

product. But if you get Proctor and Gamble, JP Morgan doesn't care if Prot and Gamble use your product. So even

when you go to market, you've got to target instead of trying to be too horizontal unless it's bottoms up. On a

sales side, you've got to try to go after one or two very specific verticals because there is a very clear lighthouse effect. You want to go after the best

effect. You want to go after the best one and get the best one and then you basically win all the other ones in your in that vertical.

>> I think you might know my traditional closing question uh that I ask everybody. What is the kindest thing

everybody. What is the kindest thing that anyone's ever done for you?

>> There are so many. I think uh the the best one is a guy called Bob McDonald. I

was basically a student uh a business school student on the east coast. I

really wanted to uh get a job. I was in a visa. I wanted to get a job in Silicon

a visa. I wanted to get a job in Silicon Valley. I was somewhat unqualified. I

Valley. I was somewhat unqualified. I

was I'd never been a product manager before. I'd been an engineer and never

before. I'd been an engineer and never worked in photonics optical networking before. And Bob basically saw a spark in

before. And Bob basically saw a spark in me and said, "You know what? I'm going

to make a bet on you and I'm going to hire you and I'm going to bring you to Silicon Valley and you're going to be he was a Sequoia funed company, one of the hottest companies in the valley. He

could have had any pick of anyone but he bet on me. So I basically have taken this approach that I try to pay it forward and I have no expectation when I do something for someone.

>> What created the spark in you?

>> Like what about your life? Where did the spark come from? Uh for me it's all about just knowing how fortunate I am to be healthy. Uh to have a family that

be healthy. Uh to have a family that loves me and to know that in almost every every run of the simulation I could be in one a million different

worst circumstances that I am today. And

so just gratefulness and gratitude about where I'm sitting. I mean we are sitting in literally the top 1% of the 1% of the 1% situations right now and breathing.

And so literally I think I feel pain when I see somebody suffering and I see as they say there for the grace of God go I in some ways and but for the grace of God and you basically realize that

you're very lucky to be given this one life and you have a responsibility to the world and yourself to be grateful and to to lead the best life you can.

>> Koko, this was incredibly fun. Thank you

so much for your time Patrick.

>> Thank you. Thank you my friend.

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