How Superhuman uses video game design to make work feel more like a game

The 4 components of a game-like experience featuring Superhuman CEO Rahul Vohra

I recently sat down with Rahul Vohra, the founder and CEO of email client Superhuman, to discuss his unique approach to building products that turned email, one of the most routine and mundane daily tasks, into a game-like experience that’s fast, enjoyable, and worth sharing with friends.

With a computer science degree from Cambridge and a background as a video game designer, Vohra entered the tech scene in the early 2000s. During that time, he co-founded Rapportive, an email company that LinkedIn eventually acquired. At LinkedIn he led email integrations and witnessed rapid scaling at the company as it grew from 1,500 employees to more than 10,000. 

It was during this time that the idea for Superhuman was first formed. 

“When Gmail first came out in 2004, it was fast and clean and did one thing *email*really well,” he said.

“But over the years it became slow, started killing battery life, and was getting bogged down by extensions. That’s why we wanted to create something that would be like if you were to build Gmail from scratch, but with today’s technology that was blazingly fast, visually appealing, and keyboard-driven.”

But what would be the secret sauce that made all of this work?

Going back to his roots, Vohra started from first principle as if he were going to build a highly entertaining, maybe even slightly addictive, video game.

Game-like experiences will ride the next big wave in tech

Today, many companies are trying to build “Superhuman for X.”

But as Mehdi Boudoukhane pointed out, it’s not quite as easy as it sounds. 

In Vohra’s case, his background and focus have enabled him to successfully create the delightful experience we associate with Superhuman today: an invite only, $30/month email service with more than 220,000 people on its waitlist.

Superhuman provides a delightful experience all the way to inbox zero using a deep background in game design.

As one of the first productivity tools to emerge with a game-like experience, Superhuman is uniquely positioned to ride the next massive wave in tech as video games become a driving force for mainstream consumer culture.

I predict we’ll see more game-like experiences emerge as gaming goes mainstream and more developers, founders, STEM students will lean into gaming best practices as they create new products – in the same way Vohra has with Superhuman.

There are already early, promising shifts in how we learn, collaborate and ship new software experiences. Figma’s multi-player technology and Repl.it’s real-time collaborative coding are early examples for developer and design tools, however I believe this is just the beginning and more will emerge across different teams, sectors and use cases.

The proliferation of gaming culture

Before we dive into the core components of a game-like experience, let’s look at early signals of the massive wave to come in gaming.

The gaming industry is now bigger than Hollywood. Americans spent $43B on video games in 2018 alone. Gaming culture will be increasingly synonymous with mainstream culture as professional gamers become celebrities, award shows celebrate game creators and streamers, and an explosion of new jobs emerge to support the gaming ecosystem.

The gaming tech stack is growing and well-funded. New platforms, leagues, content studios and a whole ecosystem of analytics, performance coaching and new technologies are emerging to support consumers, prosumers and professional gamers. There are an estimated 759 gaming related startups today.

The end of ‘game shame.’ Gaming has long battled a negative social stigma of promoting violence, misogyny and an often misunderstood camaraderie for the loners and socially inept, however increasingly video games are used in school to teach STEM and provide an alternative to traditional sports.

Research suggests girls who play video games are 3x more likely to study STEM. As games become more age, gender and geographically diverse, we will see a more inclusive ecosystem and a shift in the traditional ‘gamer’ stereotype.

In the few years, we’ve seen an influx of coding bootcamps and original programs like Kode with Klossy, a code bootcamp designed for girls 13-18, create more inclusive opportunities for underrepresented groups to study STEM.

I’m excited to see (and fund) original content such as video games and software experiences, especially those designed for women and underrepresented groups to expand their technical abilities.

The four components of a game-like experience

Getting a bit more down into the details on Superhuman’s video game approach, we can see how the team leverages video game-like engagement hooks and rewards that tap into intrinsic motivations of users.

There are four key components to the Superhuman experience:

Goal: To get to inbox zero. 

During their one-to-one onboarding session with new users, the Superhuman team observes how an individual interacts with their inbox and identifies stressful patterns of behavior, which informs how they encourage new users to work towards inbox zero.

“Most companies worry about what users want or what they need. But we don’t worry about that at all. We obsess about how users feel. We make users feel is just as important as what we make. And what we actually make is joy, in software form,” Vohra said.

More than anything else, Superhuman is a direct result of an intense focus on the emotions behind the experience that ultimately lead to delight.

Control: Keyboard shortcuts. 

These controls are taught to the new user during an onboarding session and help them quickly navigate through the tool and execute tasks more quickly when using it.

While Superhuman didn’t invent shortcuts, it created a more approachable and popularized version of command line shortcuts that developers use daily.

I call this the “consumerization of the command line,” a shift in how users interact with their devices where a command line interface and use of keyboard shortcuts is used to remove distractions and increase productivity in a single session.

Since the launch of Superhuman, we’ve seen Command E, keyboard shortcuts to search and open any document, and Linear, a streamlined bug tracking tool and modern alternative to Jira.

Tutorials: Training.

This is the functional onboarding where the user gets to hang out with the Superhuman team, learn the controls, and is shown the goal, all within a safe environment with a friendly person who’ll help you as you try out the controls and use new moves.

Like any good game, many superfans have designed their own ‘cheat sheets’ and share their personal hacks on social media with other fans.

For games and most productivity tools, “just enough” training can be achieved through a few onboarding screens and a standalone Discord community for users to learn from self-serve education and other users.

Pace: Speed.

A good game flows smoothly and consistently builds momentum and speed as the user becomes more experienced, which is why Superhuman has focused so intensely on speed. They help users maintain a state of flow and focus with more speed and less cognitive load than other email clients. Users are immersed in the experience.

“With these elements in place, you have the perfect ingredients for what is essentially a video game–and then you can start to layer things on top of that. One of the ways we do this is the name itself: Superhuman. Users are the superhumans; they’re the main character in the game–and by playing it, they become brilliant at what they do,” Vohra said.

Conclusion: While video game design in the context of workplace productivity is still fairly new and experimental, the core components bring a refreshing approach to building better products at work.

Research suggests more than half of all employees are unhappy at work because of the software tools they’re using.

I hope to see more design elements inspire new tools and processes such as keyboard shortcuts and real-time collaboration that seamlessly integrates both “single player” and “multiplayer” modes to make work increasingly feel more like a game.

What’s next for Superhuman?

Looking ahead, Superhuman plans to double down on single player mode. 

The reason: Vohra is more interested in horizontal teams than vertical teams, and wants to see what it looks like when all of the executives and leadership roles within a company are using Superhuman. This means rather than focusing on building new team collaboration tools, their existing features may just be tweaked and marketed differently down the road.

“I’ve always believed it’s worth it (although probably harder) to absolutely nail the consumer single player use case before you start going into teams. So we’re very much like Dropbox and say, ‘Let’s nail that single player experience first,’” Vohra said.

In the future, the Superhuman team will spend about half of its time doubling down on the things that users love and the other half of the time systematically overcoming objections to adoption from the target market.

Watch the full discussion & please say hi on Twitter!

I’d love to get your thoughts and feedback.

“free” can attract the wrong users. Find out if freemium is right for your startup with Slack Head of Self-Serve Fareed Mosavat

In this talk, Slack Director of Product Fareed Mosavat will share his framework for building freemium business models.

You’ll learn the 5 criteria to determine if a freemium business model is right for your business:

1. Do you have access to lost cost acquisition channels?

If not, start by building an acquisition engine An acquisition engine requires a deep understanding of users: content, competition, cross-company virality

“Paid marketing & freemium are oil and water”

2. Is there a quick activation path?

If not, make onboarding a core priority. Free users require fast activation or else they’ll churn or remain dormant forever

“Free can attract the wrong users, activate the right ones ASAP”

3. Do you have internal growth loops?

If not, expand into multi-player features. Build features that enable collaboration, cross-team visibility and unlock value for managers.

“Teams are inherently collaborative, but we have to productize it.”

4. Is your core audience empowered to purchase?

If yes, remove as much friction as possible – Optimize your pricing page – Self-serve add-ons & upgrades (no sales rep needed!) If no, find ways to work around procurement and manager approvals”

5. Is there a clear value metric?

Determine your first value metric and create a conversion at this moment. Value should increase over time, but start you need to start somewhere! “Premium features are hard to anchor on!”

This talk was originally created for SaaS School, an invite-only program for entrepreneurs to learn from the fastest growing software companies like Airtable, Dropbox, Drift, Slack and more.


Why the next professional network will look nothing like LinkedIn

As LinkedIn unbundles, SaaS companies emerge as leaders of the new professional networks

LinkedIn, now in its 16th year, was built for a different era where professional ability was confined to a resume and recruiters served as gatekeepers between professionals and hiring managers.

Resumes, career fairs, networking events, professional organizations…

If the new American Dream is defined by “creative expression, online influence and extreme optionality” over linear moves up the corporate ladder, then LinkedIn is enough to make any Millennial or Gen Z jobseeker cringe.

Today, we’re seeing an “unbundling of LinkedIn” with a whole ecosystem of programs, services and technologies to better serve the 500 million+ professionals across different geographies, sectors, interests.

In this essay, we’ll explore:

  • LinkedIn: first to market with enduring network effects
  • What’s broke? 75% of LinkedIn revenue comes from recruiters
  • Why the resume is dead and what’s next
  • SaaS companies emerge as the new leaders of professional networks

LinkedIn: first to market with enduring network effects

LinkedIn started as the first social network for working aged adults and scaled into an enduring platform that has outlived its consumer social peers (Friendster, Myspace). Long before YouTube, Facebook, Instagram, there was LinkedIn.

LinkedIn benefits from two key factors:

  • Strong, enduring network effects: steady stream of students who enter the workforce each year, job hopping and career changes increase engagement
  • Highly monetizable beyond traditional ads: ability to charge consumers (jobseekers) and businesses (sales, recruiting, marketing) for premium features and services

What’s broke & new opportunities to displace LinkedIn

To truly understand how a platform works, examine how it makes money.

In the early days of LinkedIn, its ability to generate significant enterprise revenue was a core differentiator compared to other social networks which have limited forms of monetization beyond standard ad units.

But in the same way that the consumerization of enterprise technology has given individuals more freedom, choice and control over the tools they use at work, LinkedIn’s loyalty to recruiters comes at the cost of a better end-user experience.

The end-user experience goes down as the number of InMail from sales reps, recruiters and marketing campaigns goes up.

Today, up to 75% of revenue comes from employers and recruiters. And it shows.

What’s broke? The resume.

While the resume is a fairly accurate snapshot of professional credentials.

It fails to reflect true potential such as grit, ability to collaborate with others and professional skills developed on evening and weekends.

Much of LinkedIn’s value today is in its ability to link to Dribbble, Github, Substack and new platforms with shared skills and a thriving community to critique your work.

New opportunities include: 

Professional networks with shared interests and emphasis on peer education: Dev.to for developers, Girlboss for female business owners. 

Where people want to hang out on evenings and weekends. 

Professional networks with peer reviews and recommendations: TrustedFor for suggesting in-network experts for specific projects. 

Where shout-outs are fun and feels more like a social network than writing performance reviews. 

Professional networks where individuals can build their own services business with public profiles and reviews from happy customers.

Where your hobbies and side projects can turn into meaningful extra cash. 

Moonlight matches developers with creative side projects and opportunities to “moonlight” outside of their current role using a pseudonymous profile with professional experience and community reviews.

Developers spend up to 20 hours a week on technical debt and fixing bad code, the ability to find interesting projects outside of work is accelerated learning and career progression that’s not dependent on current employer.

What’s broke? The promised land that lives behind a paywall.

Want to connect with like-minded people on LinkedIn, apply for jobs or find better work? It’ll cost you $29.99/month. 

A free plan on LinkedIn offers only the ability to see the last 5 people who have viewed your profile.

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New opportunities include: 

SaaS tools that deliver daily utility emerge as the leaders of new professional networks.

By adding a public facing profile and the ability to share your work ie: open-source designs, templates and projects, SaaS tools that invest in community can deliver a better end-user experience that’s inherently sticky.

When users build a portfolio, grow their following and contribute to the community, they build a personal track record and bring the tool from one job to the next (BYOT).

Example 1: Figma Community

The ability to “Publish publicly” has been integrated into the core workflow and requires two clicks from the user. 

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Example 2: Webflow Community

The ability to share your work, build an audience and allow users to clone your work.

A single user can see 25K+ views, 10K+ comments and 1K+ clones.

Power contributors can build a following, find new work and contribute new work to the community independent of their current employer.

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As SaaS companies expand from tool-based utility to professional networks, companies will measure user retention (from job to job) in addition to traditional employer focused metrics (logo retention).

The best networks will play an active role in how users make their next big career move through user conferences, branded Slack channels and curated events.

As LinkedIn continues to unbundle, we’re entering an era of productivity, collaboration and creativity where the new professional networks are not new at all. They’re the tools we use everyday.

I’d love to hear your thoughts on the unbundling of LinkedIn and new opportunities for professional networks. Say hi on Twitter: @briannekimmel

Why ex-Airbnb, Coinbase, Uber will build the next $1B+ workplace product

In a recent interview with TechCrunch, I shared why I’m betting on the consumerization of enterprise and why outsiders (consumer product builders) are likely to build the next great product at work.

“The next generation of applications for the workplace sees people spinning out of Uber,  Coinbase  and Airbnb,” 

“They’ve faced challenges inside their highly efficient tech company so we are seeing more consumer product builders deeply passionate about the enterprise space.” Read more here.

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Prior to joining Zendesk, I was on the buy side running nearly a dozen RFPs per year and putting tens of thousands of SaaS dollars on a corporate credit card each month.

I spent 4 years at Expedia scaling from a performance marketing role into the Head of Social Media, which owned acquisition, engagement, customer support (on-shore and off-shore with a tiered escalation strategy) and community (a growing team of in-market brand managers + translation experts).

Expedia, like many high-growth tech companies, have a “do everything in house culture.” We hired SEO, SEM, FB and Customer Support specialists and gave them freedom to choose their own tools. We rarely used agencies and we taught individual contributors how to purchase tools without engaging procurement (within reason and with a goal of freeing up procurement to focus on higher profile projects).

After 4 years of deeply analyzing tools and in some cases engaging internal engineers to build our own, I made the leap to full-time B2B by joining Zendesk to scale the product portfolio from one to seven products include live chat, analytics and tools beyond the core help desk ticketing software.

If you’re thinking about building something for the workplace, here’s what you should know

⚠️ Caution: Tough feedback ahead ⚠️

  1. In the early days of the company, things will come easy.

It feels a lot like building a consumer product, but maybe better (early users pay $) Keep in mind: these users are the easiest to acquire Selling to other startups is a great strategy, but that well easily dries up

Startups churn at a higher rate & have a lower expansion rate. I wrote about the challenges of a purely self-serve business here

2. Purely self-serve businesses are easily commoditized.

Think you’re the only “product person” working on this problem?

You’ll quickly uncover others, especially as you are out fundraising.

To quote @davidu: “Good ideas comes in bunches.”

Some recent example: Tandem/Around & Linear/Height

3. Sales is an achilles heel, figure it out sooner rather than later.

Behind closed doors, every self-serve SaaS companies talks about revenue they missed by not figuring out sales sooner.

Find an advisor who has done it before and build the muscle before you need it.

Keep in mind: Dropbox created whitespace for Box. Microsoft Teams fast followed Slack with an enterprise-grade product.

4. Hiring will get harder and your company culture will change.

Self-serve is a life phase and you’ve chosen to build in a space with an evolving business model I call it “horses for courses”

The people you hire today are likely not the same people you’ll have around in later funding rounds

On the product side, product people love joining self-serve SaaS businesses. But once the core tech is built, those same people don’t want to be handed feature requests from large customers.

Read: Enterprise Products Vs. Consumer Products

On the sales side, there will always be challenges If a sale team doesn’t hit their quota, guess what? They’ll leave for a company where they will In the early days, I suggest a Head of Sales and Customer Success someone who can partner directly with founders.

But eventually, you’ll need to layer in a more traditional sales org If you’re a product person, this will feel uncomfortable Company culture will change and guess what? You’re now running a real B2B company.

As you think about the transition from consumer to workplace tech, talk to folks who have made the switch Be mindful of the changes that come with a constantly evolving business model.

5. The day-to-day doesn’t scale well, that’s the point.

Somedays it will feel like a consumer business, other days you’re flying across the country for one meeting.

But trust me, you’re not flying to SXSW… You’re going to Newark, San Jose, Omaha and Orlando for conferences

You will have to fly to meet customers, save customers and speak at industry events. Welcome to the wonderful world of B2B!

For more thoughts on early stage company building, especially SaaS business models, please subscribe to my newsletter.

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Turn unused space into extra income with AirGarage

Announcing my investment in AirGarage, the first API for physical space starting with parking lots

“This land is your land, this land is my land From California to the New York island From the Redwood Forest, to the gulf steam waters This land was made for you and me”

As the old song reminds us, America is a land filled with forests, streams and wide open spaces from sea to shining sea.  

But if we’re honest, the average American sees more potholes than palm trees on any given day.

In urban metro areas, parking lots cover up ⅓ of the land area, becoming the single more salient landscape feature of our built environment.

Los Angeles alone has 18.6 million parking spaces, which adds up to 17,020,594 square meters of land.

This adds up to more than three parking spaces for every vehicle in the city.

A breakdown of parking spaces in Los Angeles

For business owners, parking spaces and larger lots are underutilized assets.

Hotels in particular require fewer parking spaces for guests as 52% of all work-related ground transport is now booked through ride-sharing apps.

Moving outside of cities, we see sprawling church parking lots, university campuses and industrial parks in suburban and rural areas.

In these regions, there is more available land than demand for parking, which create larger spaces for public use such as school fundraisers and community events.

But renting the space requires additional bookkeeping and vendor management to both maintain the space and get paid for each event.

This is why today, I am thrilled to announce my investment in AirGarage as part of a round co-led by Founders Fund and Floodgate with support from Ryan Delk, Ryan Hoover and other angels.

AirGarage is a real estate company building the first API for physical space starting with parking lots.

Organizations of every kind including churches, hotels and businesses use AirGarage to handle lot enforcement, payments, and visitor registration. It’s an easy way to passively earn extra income by renting out their unused space.

For consumers, this means fewer parking monopolies, more available spaces at better rates, especially in urban metro areas during periods of peak demand such as conferences and sporting events.  

The AirGarage founders embody what it takes to build a disruptive real estate technology company with a deep understanding of the problem today, aligned incentives for landowners and consumers, and a technology layer that serves as foundational infrastructure for new companies such as cloud kitchens, pop-up retail experiences and group based fitness activities.  

A converted parking lot in Downtown Los Angeles

In a world that’s increasingly multi-modal with bikes, scooters, one-wheels and more, AirGarage is well positioned to help landowners unlock revenue from parking today and create entirely new experiences for everyday people in years to come!

AirGarage dashboard view

If you’re a landowner who wants to make extra money for your space, schedule a demo to learn more.

Kylie Jenner, Joe Rogan and the new American Dream

I recently joined the Square One podcast with Romeen Sheth to discuss the latest trends impacting the way people work.

In this episode we’ll discuss three themes that I’ve been actively exploring as an early stage investor:

The new American Dream

How creative expression, online influence and extreme optionality ie: remote work, calendar flexibility and the freelance economy is changing how Americans define success.

YouTubers and Twitch streamers

The age of the individual   

How the gig economy exposed a need for better tools for freelancers and side-hustlers including personal finance, productivity tools and new economic opportunities for blue-collar and white-collar workers.

And why customer support is a good analogy for augmenting (and not automating) knowledge work.

Founder as a service 

Following events like Fyre Festival, we’ve seen Distrust Go Viral and a shift away from pay-per-post influencers to a new generation of creators.

In the next wave of online influence, celebrities will launch their own brands and move away from paid posts and collaborations w/ legacy companies.

Kylie Cosmetics is worth $1B+ w/ only 12 employees!

How 20-Year-Old Kylie Jenner Built A $900 Million Fortune In Less Than 3 Years

With Shopify, we saw the ability for anyone, anywhere to create their own e-commerce company.

In future, we’ll see new platforms for celebrities, influencers and aspiring creators to build just about any type of tech-enabled business.

Listen to the episode or skim the full conversation below.

But first, sign up to get future essays delivered to your inbox:


You’re listening to Square One, a podcast where we interview entrepreneurs, investors, and executives at the cutting edge of business.

I’m your host, Romeen Sheth. Today’s guest is Brianne Kimmel, network leader at Village Global.

Scale and reach are off the charts today. Joe Rogan gets more views than CNN, Kylie Jenner’s dominating cosmetics with less than 30 employees, and Conor McGregor can sell more pay per view than UFC.

But with access comes real responsibility. Fyre Festival is the latest SNAFU to fall trap to this. So what’s going on?

Romeen Sheth: The age of the individual is on the rise, and AI is automating away old world jobs while increasing leverage for new world jobs.

This paradigm shift is causing us to reimagine work. What does it mean to participate in the workforce?

How will we interact with one another, and what are the skills of the future?

Welcome Brianne, and thanks so much for joining us.

Brianne Kimmel: Hi, thanks so much for having me.

Romeen Sheth: So Brianne, really excited to have you on the show today and dive pretty deeply into your perspective on all things future of work, but before we jump in, tell us a little bit more about your background.

Brianne Kimmel: Yeah, sounds great. So I spent most of my early career at Expedia. I worked across the consumer experience and also the B2B side of the business.

This was where I got most excited about enterprise businesses and the future of work.

Expedia was one of the first technologies to really tackle a very large antiquated sector and bring them online.

So if you think about airlines, hotel chains, car rental companies, before Expedia, essentially the entire landscape was fragmented and heavily reliant on travel agents. 

Brianne Kimmel: By bringing all of these services online, it actually created a whole new level of transparency in terms of pricing, standardized star ratings and publicly available consumer reviews. 

I think what was really interesting was during my time at Expedia was the mass consolidation of these online travel agencies. 

Expedia had acquired Orbitz, Travelocity and HomeAway to bring non-traditional, Airbnb like accommodations to the platform. 

Brianne Kimmel: It was great to experience first hand the size and scale of a platform like Expedia with supply consisting of the world’s oldest hotel groups and airlines and demand

So it was really great to really understand how do you use software and how do you use a marketplace, essentially, to bring in an outdated sector or category of businesses online, and then how do you use even reviews and recommendations and really strong data science to essentially bring a whole new level of transparency to a certain category.

Following my experience at Expedia, I got recruited for a role at Zendesk. 

So I took my platform experience from Expedia and applied it to enterprise software. During my time at Zendesk, we went from one product to seven products.

Brianne Kimmel: A lot of folks know Zendesk for Zendesk customer support, which is our core product, but essentially we built a whole suite of additional services such as live chat, more robust analytics, and a number of basically new technologies that would help us not only sell better into the enterprise but ultimately compete against Salesforce.

Brianne Kimmel: It was really cool, because during this time, I started spending a lot of time with our customers, so Peloton, Allbirds. I built a program called Zendesk for Startups, which was our way to create a dedicated program of the next generation of great companies. So it was a really interesting time in Zendesk journey where essentially, as we were moving that market and tackling more large antiquated enterprise companies, we also wanted to make sure we had programs and infrastructure in place to really support the next generation of great, disruptive companies.

Romeen Sheth: Yeah, your suite of experience is really interesting to me, because I think it ties to kind of a fundamental underlining of what’s going on in the labor markets today, right? So the labor markets we’re living through right now are, I think, incredibly interesting. It’s only at certain times in history that we reach such inflection points where policymakers, business leaders, and workers, frankly, are thinking through the benefits and uncertainty at such scale.

Romeen Sheth: So it’s a huge point we can obviously talk about for a full episode, but at a macro level, what’s your view on how to think about the intersection between technology and the labor market?

Brianne Kimmel: Yeah, that’s a great question, and I’m happy to kind of dissect it in terms of how I’m thinking about how do we even just categorize work? Because I think right now, there are just so many different ways to actually think about post education. How do we classify our work? There’s a lot of conversations around things like a side hustle, or you’ll hear folks talk about underemployment.

I’ve really been thinking about four types of labor:

  1. Centralized white-collar: knowledge workers in an office
  2. Decentralized white-collar: remote & freelance knowledge workers
  3. Centralized blue-collar: manual/physical labor in factories or warehouse facilities
  4. Decentralized blue-collar: desk-less workers such as delivery, installation and maintenance professionals.

Brianne Kimmel: So what’s interesting today is that in addition to having white collar work and blue collar work, we actually are starting to see new trends in terms of centralized and decentralized.

Technology companies will talk about what does it mean to have remote teams? Remote teams are becoming more and more important. You see that white collar distributed work is actually, there’s a broader trend where people actually like working from home.

It’s great to have your own setup. They like the flexibility. We’re seeing trends, even, in terms of how does this create a more inclusive workforce, I think specifically for new parents and also for the aging population.

We’re seeing that people are willing to work longer and they’re willing to continue contributing to their places of employment longer if they’re able to choose the way that they work.

Oftentimes, the way that they work is best from home.

Romeen Sheth: I like the decentralized, centralized framing, because I think if you look at the value stack, you see kind of different dimensions of what’s going on today. You have one side of the value stack which has a ton of increased opportunity sides, right? Finding talent and high skilled workers can be challenging in today’s market. But then you have the other part of the stack, more low skilled workers in many ways are being left behind. 

You have a pretty interesting perspective actually specifically on how millennial men are less likely to work than any other gender demographic. Talk a little bit more about that.

Brianne Kimmel: There’s also a lot of research that’s been done lately on the millennial work opt- in rate, and what’s interesting is when you look at recently changes. We’ll look specifically at the US labor market. Specifically with the US labor market, we have seen a shift where millennial men, so primarily men who are 25-34, they’re actually opting in less than previous generations, and more specifically, post-global financial crisis and post the previous economic downturn.

We’ve seen a major shift where actually, there’s an element of unemployment that’s happening, or underemployment that’s happening across the board. However, we’re seeing that men in particular are actually opting out rather than accepting underemployment, which is quite interesting.

Romeen Sheth: It’s interesting too because you can cut it kind of from a demographic perspective, but you can cut it from a skills perspective. One of my favorite or most interesting stats is if you look at it from a skills perspective, there’s actually a huge technical talent shortage.

Brianne Kimmel: Yes.

Romeen Sheth: So by 2020, there’s gonna be over a million and a half software development jobs than actually applicants who can fill them. So how do you think about it kind of from a skills perspective?

Brianne Kimmel: Yeah, I think this is a really interesting point, because I think historically when we talk about software development, there’s an assumption that you need to have a computer science degree. Now that we are seeing different types of software development emerging, we’re actually seeing a whole new landscape of both software technology that will help us build faster, but also ways for people to learn how to build software faster, as well.

So I think what’s interesting is we’re actually starting to see that computer science majors are opting into much more challenging roles when it comes to the full stack of things that we need to build.

So you’ll notice, we’ll talk a lot about in Silicon Valley is the smartest and the most technically capable developers, they want to work on things like AI, ML projects.

There’s a shift towards the smartest people really want to work on these new applications and these frontier technologies where essentially you need to have a computer science degree or you need to have additional training for that.

Brianne Kimmel: What this has actually done though is it’s actually created a whole new landscape of roles and responsibilities within an organization where essentially, you don’t need a CS degree. So there’s a lot of great programs. I think in the previous tech cycle, we saw coding camps and things like Dev boot camp or like general assembly, where essentially you can learn how to build great applications and especially in sort of front end web development. You can actually do a lot of things without a CS degree, which is great.

Brianne Kimmel: So we’re kind of seeing these two paths where I think there are individuals who are technical-ish or technical enough to really be able to add value outside of having a traditional computer science degree. I think this is where we’ll continue to see programs like Lambda School, for an example, where essentially, it does make sense for us to provide new classes of work for people who would like to work for a tech companies, but they either can’t or aren’t ready to commit to a full CS degree.

Romeen Sheth: It’s interesting because I think that has some pretty deep implications for skilling capability building. I want to jump into that a little bit later in the conversation because I think there’s some interesting nuances there. I’m curious to hear your perspective on how you think about job characteristics and job skills that folks should be thinking about.

So the McKinsey Global Institute did a study pretty recently on looking at characteristics in occupations that could be automated away. It was interesting because the conclusion was less than 5% of jobs were at risk of being full automated away, but up to 40% of skills that are the underlying components of those jobs will be affected by technology.

So how do you think about kind of that conclusion or that statement both from the perspective of a startup that’s building and then from the perspective of an individual worker?

Brianne Kimmel: Yeah, so this is a topic that I think about a lot, and I think what’s great is the time that I spent at Zendesk was very much a time period where I learned a lot about various functions within an organization. I think that customer support is actually a really good analogy for the way that I think about automating work versus augmenting work.

If you look at the sort of day to day roles and responsibilities of a customer support agent, there are a lot of things that we can augment and that we can automate to make their day to day much more enjoyable.

Brianne Kimmel: So I think the question and what you sort of read in a lot of headlines is that jobs are being replaced, things are going away, and I think that oftentimes, those sort of headlines don’t really dig into how complicated and how nuanced each individual role actually is.

So I’m an investor in a company called Forethought AI which does enterprise search and they do what we call human augmentation. They’re starting with customer support.

The reason they started with customer support was this is one function within an organization where essentially, agents don’t really have the tools that they need to do their job.

What I mean by that is we have created a whole suite of different technologies for agents to receive comments from customers and to respond to them, but we haven’t gone the next layer deeper where we actually give them access to the right information internally to solve problems quickly.

Brianne Kimmel: At Zendesk, we’ve done a lot of research around this as well, as far as how long does it take to respond to a customer’s question?

Oftentimes, the reason that it takes so long is that the agents don’t have the information they need to solve the problem. So they don’t have access to internal information or maybe data is sitting in different technologies that they don’t have access to.

So I think what’s interesting is often times when we talk about replacing roles, or when we talk about workplace automation, what we really need to focus on I think in the next 5-10 years is how do we actually augment a person’s day to day and actually remove some of the daily annoyances that keep us and hold us back from doing what we’re meant to do faster.

Romeen Sheth: Yeah, I like that framing a lot, because one of the things I’ve been most interested by is this idea of digital transformation at work, and specifically two buckets of it.

One which is entirely new forms of work, and then the second which is work that can created on a scale by platform businesses. On that kind of latter point, I had JD Ross, who was one of the co-founders of Opendoor on the show, and he talked about how he’s seeing individuals actually created larger home services businesses off of the Opendoor platform.

Romeen Sheth: I think it’s a very interesting kind of nuance. I’d love to get your perspective on how do you think about, there’s obviously the gig economy, but how do you think about how the gig economy and this opportunity set particularly unfolding?

Brianne Kimmel: I absolutely love what Opendoor’s doing and I think that’s, Opendoor will be an analogy for a number of other sectors. I think the same way that the Lambda School model which basically, you can learn without any sort of fees and you don’t have to pay until you get a job.

I think these sort of models are great starting points, and I think they will carry into other sectors, which is awesome. What’s interesting about building services on top of these platforms is that it creates a whole new opportunity for people to make money.

Brianne Kimmel: So I think historically, when we think about the gig economy, I think one of the challenges with the gig economy is typically, you will not, they’re used as basically complimentary or supplementary income.

Oftentimes, Uber drivers still have a full time job or you have to essentially have multiple gig jobs to really make a true salary. Whereas I think with a lot of these platforms, I’ve spent a lot of time and done research with specifically with people who do full time HomeAway rentals or Airbnb rentals. Essentially, you could build your own services business on top of a number of these platforms.

Brianne Kimmel: I’ve been spending a lot of time lately looking at marketplaces for knowledge workers, and I have two examples. So one is a company called Wonder, which is based in New York. They do market research on demand, so essentially, if startups all the way up to Fortune 500s want to access additional individuals to help with research, so think basically early research that will then be passed to management consultants or to lawyers or accountants.

This is a job that didn’t exist before, but for the average person, especially someone who is either in college or recently graduated from college to build your own business where you’re able to do research from home is actually a really compelling alternative to driving for Uber or doing Postmates after you’ve recently received your college degree.

Romeen Sheth: Let’s dig into that a little bit more, because I think what you’re hitting on is kind of the intersection between doing new services on top of existing platforms. Then there’s another bucket which is just entirely new types of work, and you have a really interesting perspective on this with your thought process on influencers and streamers.

There’s a really good tweet that I was reading this weekend, and it pointed out that now Joe Rogan gets more views than CNN, Kylie Jenner is dominating cosmetics, and Conor McGregor can sell more pay per views than the UFC.

Romeen Sheth: I think there’s two threads there, right? One is just entirely new types of forms of work, and then the second is kind of the age of the individual and a little bit of the power of technology with distribution scale. Let’s talk about the first one first. Talk a little bit more about your perspective on not just digitally enabled work but really entirely new type of work.

Brianne Kimmel: Yeah, I mean, I think this a really interesting point where I think we’re seeing this shift where in generations prior, I think specifically post World War II, oftentimes people took the job that was open and available, and they took a job that was close to home. I actually have recently done a lot of research on post World War II, like how did we transition from a wartime culture and specifically very much a blue collar culture into these new communities of white collar workforces. Where did we actually start transitioning from kind of the industrial revolution into where we are today?

Brianne Kimmel: During this period in time, that’s when we saw the introduction of things like the Myers-Briggs and the sort of new ways of thinking about work where essentially, people want purpose. I think prior, it was how do you work hard, how do you demonstrate that you’re working hard, and how do you basically provide for your family? Where I think today it’s more about, how do we find purpose? How do we find new ways to be creative and to build? I think what’s different about our generation is that we are highly creative and we are a generation that wants to build something.

Brianne Kimmel: We see with these new platforms, Twitch is a great example. YouTube is a great example as well where we have these new platforms where essentially, you can actually create your own type of work. There’s nothing stopping you from becoming an expert in basically any field that you’d like. I think an example I have here is I recently went to TwitchCon, which was an amazing experience to spend time with a large group of people, thousands of people, actually who have either built a company on top of Twitch from a tech standpoint, or who actually stream full time.

Brianne Kimmel: What was interesting was I had a conversation with an individual who is a streaming coach. I was saying to her, I said, “What did you study? What did you dream of doing when you were growing up?” She’s like, “When I was younger, I never thought I was going to be a coach. I never thought I’d be a professional coach, and I would’ve never thought that I would be helping individuals become more animated as they’re broadcasting their ability to play video games. There’s just so many classes of work that we didn’t know it exists. I think touching on influencers and streamers, there are amazing ways to do what you love and make enough money to not only pay the bills but also become incredibly successful.

Brianne Kimmel: So I’m super passionate about these new platforms for distribution, how people are using them to create new types of work.

Romeen Sheth: That’s interesting. Let’s dig into that a little bit more, because I think one of the things that I’m seeing is as we move more and more towards this world where individuals can leverage all sorts of technical platforms, whether it’s infrastructure or distribution and have the ability to create upsized economic value and influence. It’s exciting because of the leverage, but it also requires, I think, a new set of responsibility guidelines and standards. We saw the effect of this on a really small group of influencers and how it exacerbated the impact of Fyre Festival.

Brianne Kimmel: Yeah, I agree, and I think what’s interesting and one thing that when you talk to influencers who are just getting started, it goes back to the early days of Hollywood where yes, your quality of content does matter, but also there is an element of access and of luck. I think specifically for YouTubers that are just getting started, oftentimes as these platforms start to mature, it does become increasingly hard to get discovered or to become famous.

Brianne Kimmel: So I think it’s really interesting to see over time, in the age of the individual, we actually start to revert back to very tried and true behaviors of individuals ultimately need groups. I think that’s something I saw at TwitchCon where essentially, streamers don’t operate on their own. They actually find ways to collaborate. Influencers also create this whole network of other influencers where they can promote each other’s content or work together and do a lot of collaborations with brands.

Brianne Kimmel: So I think while we’re entering this age of the individual, we’re actually starting to see these kind of next gen of social constructs being built, which is really fascinating. I think to kind of talk about Fyre Festival for a little bit, Fyre Festival was only successful because they leaned into a very human truth and something that’s very true today, where people are looking to have access, and they’re looking to actually build credibility through spending time with other influencers or experts.

Brianne Kimmel: So while over time we are kind of the age of the individual, I will say that I think with Fyre Festival for an example, these influencers that were involved in actually promoting the event, part of the hype and part of the demand was actually, wouldn’t it be great if I could get access to these influencers and I can spend time with them and I can kind of live, access that lifestyle by paying for a ticket. It turns out people are willing to pay for those tickets.

Romeen Sheth: Talk a little bit more about kind of distrust and how in kind of the age of today you have companies where reputations take a long time to build and one misstep or trust can kind of exacerbate out of control. How do you think about that from the company perspective on how to proactively manage?

Brianne Kimmel: Yeah, I mean this is something that I’ve been spending a lot of time on. I think a lot of these heritage brands that we know and love have become so large that it’s very challenging for them to be transparent. So I’ve seen this when working with Fortune 500 companies where we start to, as your company grows, and this is natural, we start to have more policies. But one of the challenges with a lot of these policies is we start to lose our transparency over time.

Brianne Kimmel: This is an area where as we see this next generation of great companies, direct to consumer brands are doing incredibly well at being transparent from day one. They’re also aligning to their, they are developing their own mission and values, which really resonates with today’s consumer, but I think one of the questions I have is long term will these direct to consumer brands ultimately consolidate, similar to the way that Expedia brands ultimately had to consolidate? And will they eventually lose their transparency over time?

Brianne Kimmel: I think it’s a little bit early for us to see that, but I’m very optimistic and excited to see these next generation of brands that are more transparent, that have better ingredients, that are really starting to prioritize the consumer. I’m just kind of skeptical and wonder at what point in time do they become large and bureaucratic as well?

Romeen Sheth: So as you’ve worked with a lot of, as you’ve observed kind of future of work from both an early stage startup and an investor perspective and you’ve kind of seen both sides of the gamut, what do you think large corporations and larger organizations get wrong? One of the things I see a lot of the time is this idea of just capturing data without having a really clear framing of the problem that you’re trying to solve. But when you think about future of work, what do you think that large companies or large organizations get wrong?

Brianne Kimmel: That’s a great question. I mean, I think as far as large companies go, I think you’ve really nailed it in terms of saying, oftentimes the problems that these large companies face is actually, it’s a problem of access and of information. So over time, as your company grows, fewer and fewer people have access to core data. Fewer and fewer people are truly connected to the core mission of the company, and I think oftentimes, this has to do with size and with scale.

Brianne Kimmel: Now, what I think is really interesting is now we’re starting to see where companies that want to go back to their early mission or that want to innovate and get access to the next generation of consumers, they are willing to acquire companies that match that profile. So I think we’ll continue to see large acquisitions, specifically in the retail/eCommerce space, specifically with consumer packaged goods where essentially it becomes harder and harder to innovate as a large multinational company. However, it is very easy for them to spend time with relevant startups and to actually acquire them and fold them into their portfolio of brands.

Romeen Sheth: Yeah, it’s interesting. I see a lot of, especially in the consumer goods space, a lot of, and R&D and innovation is just done via acquisition as opposed to any sort of internal, organic R&D. I’m curious to hear your perspective on the flip side of that same question, which is what do you think startups get wrong about large companies, right? I think there’s a lot of truth in corporates being very legacy and not adapting to technology, but I think it’s actually a lot less about sophistication with technology, which is often the conversation in startup rooms. But it’s more so about some of the things you mentioned, right? Organizational issues, cultural challenges, [inaudible 00:27:32].

Brianne Kimmel: Yeah, I mean, this is something that I talked to startup founders a lot about. I think what’s challenging is that oftentimes in the Bay area or if you’re in a very startup centric ecosystem, it’s very easy to sell to other startups. You understand their buying behavior, you understand how to partner with them or sort of what’s in it for them longterm, but one of the challenges is that selling to the enterprise is very different. It typically requires a different feature set. Oftentimes companies are looking for maybe if it’s healthcare, they’re looking for HIPAA compliance. If you are a large enterprise company, you have to start thinking about different types of contracts and different features, and there’s a lot of customizations that come when working with large enterprise companies.

Brianne Kimmel: So we see that oftentimes, startups, I feel like wait too long to talk to enterprise customers. I think that you can get a significant amount of traction by selling to other startups, and I think we see this a lot specifically with the YC ecosystems. So if you’re going through Y Combinator, you get access to not only your current batch of startups, but also any YC alumni companies. So you can see companies get to 500k, a million in MRR, and actually it’s just selling to other startups either in the Bay area or outside of the Bay area.

Brianne Kimmel: What you’re missing is actually a deep understanding of what are the nuances that comes with moving out market and just selling to larger companies, which I think this ultimately comes down to how large companies make decisions. Large companies typically make decisions based on how do you maintain current traction and kind of not rock the boat too much, and how do you think about incremental change rather than disruption. I think oftentimes that’s where startups will come in and if you’re presenting to a large Fortune 500 company, the last thing they want to hear is disruption or a complete change in structure processes, because essentially, what they’ve been doing is working well. It’s good enough and longterm, they want to figure out ways to align with partners that can de-risk what they’re trying to achieve and provide incremental change over time.

Romeen Sheth: Let’s switch gears a little bit and talk about what’s going on in the world of rescaling and capability builder. I also know Allred, the CEO of Lambda School, and Shaan Hathiramani who runs Flockjay, another interesting capability building and scaling startup out of YC right now in the current YC batch on the show. We talked about the education system at large, and I’m interested in your perspective on what you’re seeing with scaling and coaching startups. When you think from first principles, the experience can be pretty neat. Real time feedback, dynamic course experiences, flipping the classroom. How do you think about rescaling and capability building today?

Brianne Kimmel: Yeah, this is a great question. I think over, I would say even let’s zoom out over the past ten years. We’ve seen a number of great platforms that are focused on skilling and coaching, whether that be mentor mashing, like helping you find the right person to learn from, either as a peer or as someone a little bit more senior. We’ve seen education startups like Udemy and Coursera which have done a fantastic job in terms of essentially democratizing education that historically, you would have to either go get your MBA, go get your MFA. They’ve taken a lot of these really core, fundamental courses and brought them online for individuals.

Brianne Kimmel: I think in the next cycle, we’re seeing great, new companies like Lambda School, which I think what’s very interesting about Lambda School is they have infinite scale, because as they’re tackling such a large sector, which is education and more specifically an alternative to undergraduate college education, which is historically extremely expensive. Student loans are one of the largest point of stress for individuals. I think we’ll start to see new types of education and new types of even classes of work that come after individuals graduate from Lambda School.

Brianne Kimmel: Now, what I think is interesting about a lot of these re-skilling and a lot of the education and coaching startups is if you’re selling to a consumer or you’re ultimately competing for attention. I think one of the challenges that I’ve seen with specifically a lot of marketplaces that essentially offer professional coaching as a service or mentorship as a service. One of the challenges here is accountability, and it’s also competing for attention. So one of the things that I’ve seen is oftentimes with these marketplaces where one side is either an expert or a mentor or someone that is historically fairly time poor.

Brianne Kimmel: Facilitating that matching is very important, but also ensuring what’s in it for both sides? It’s very clear that there’s a whole category of young professionals who are hungry and eager to learn more, but on the supply side, it’s always a little bit more challenging to actually find the right people who a, have the time, and b, have the right incentive to actually invest in an individual for even a short, medium, or longterm period.

Romeen Sheth: Yeah, one of the things I always, and I’m curious to hear your thoughts on this. One of the things I always kind of wonder with with some of these kind of coaching on demand platforms or so, especially when they’re consumer focused, is how do they solve for the platform leakage problem, right? So if you think of, all marketplace businesses are different, but if you think of some of the kind of high profile companies that ended up not succeeding, like Homejoy out of YC, right? Raised $40 million.

Romeen Sheth: I think one of the big learnings from the nature of the transaction itself was that they were doing a great job of helping you match and find someone, but then the nature of that transaction was once you found someone to come in and service your home, you’re kind of, you trusted them and you didn’t really need to go back to the platform. So you ended up having a lot of these kind of platform leakage problems where folks would say, as a consumer, it doesn’t make sense for me to pay [inaudible 00:33:58]. Then as a vendor, it doesn’t make sense for you to take a price cut just by being on the platform. If we’re gonna develop a kind of longterm relationship, it just makes sense to take your transaction off of the platform itself.

Romeen Sheth: That’s something I think about a lot with kind of mentorship as a service, training as a service, et cetera. How do you think about that?

Brianne Kimmel: Yeah, I think that makes a lot of sense. I think in early marketplaces, we’ve seen that even with home sharing apps to an extent. We’ve seen that with the dog walking on demand services. Once you find someone that you really like and you build a longterm relationship, it is difficult to maintain a platform lock in over time. What’s interesting with a lot of these coaching applications is I think there is an opportunity to do more than just one on one matching, but also how do we think about the group facilitation of conversations.

Brianne Kimmel: I actually recently read an article that I thought was interesting that made the comparison that events and conferences are the new, that’s the number one choice for editorial. So historically, you would have magazine coverage. It was more about impressions and eyeballs and creating, brand building was actually built on a very specific aesthetic and look, whereas now that we’re in this sort of individual economy as you said. Now that we’re in this individual economy, what happens is actually people want to be directly involved in your product experience, whether that’s events or becoming an influencer in part of your platform.

Brianne Kimmel: I think there are ways to facilitate a lot of these service marketplaces by doing more of kind of a focus on community building rather than one on one matching. But I agree, I think to your point, one of the challenges with a lot of these services marketplaces is when you’re competing for attention from a consumer point of view, then oftentimes you’ll find these companies will ultimately convert to almost an enterprise sale. If it’s something that your work is paying for and it’s something that becomes a core part of your education or your career, then people are more likely to opt in and to lean in.

Brianne Kimmel: An example that I have there is there’s a company called Plato, which is also a YC company as well, and they do mentorship for engineers. What’s interesting is for Plato, they see high retention on both sides of the marketplace. So both on the supply side, these are mentors. These are mentors at top tech companies, and their goal is to essentially build a personal brand for themselves. They use it as a way to hire and recruit up and coming engineers, and then on the demand side, you have very hungry and eager young professionals who want to connect with leaders at other companies. Not necessarily even in terms of I’m ready to switch careers. I want to move to this company, but there are a lot of great things that you can learn from individuals at another company.

Brianne Kimmel: I always use personalization as an example. So if you’re working at a Bay area startup and you want to learn about personalization, then Netflix is obviously one company that you’d love to spend more time with. They’re actually located in Los Gatos and it doesn’t make sense for you to ever facilitate and in person conversation, but even getting access to someone who’s worked on personalization at the size and scale of Netflix is a really compelling offer.

Romeen Sheth: Well, let’s talk a little bit, I want to pick up on that last thread of personalization and I want to use it a segue to talk a little bit more about ML and AI and how it’ll affect the workplace. You alluded to this a little bit earlier in the conversation. One of the companies that I’m an angel in, Imbellus is doing really interesting work in the assessment space. I see a lot of interesting applications for ML and AI in helping improve the end to end talent equation. So screening at the top of the funnel by mapping the skills, matching and rerouting talent internally. Talk a little bit more about what you’re seeing in the space and how you think about it from a macro perspective.

Brianne Kimmel: Yeah, I think it’s interesting. With AI, ML, we’re seeing the impact across multiple, different sectors and functions. I think from a recruiting standpoint what’s great is we’re actually able to facilitate much stronger matches. I think what I’m starting to see as far as a macro level trend is oftentimes, the recruiting process is a pretty complex one. You can divide it into college recruiting, which historically, there has been a matching and facilitation problem where essentially you would have one person in recruiting who works at one company and they would go to a career fair which happens once or twice a year.

Brianne Kimmel: What you would find is essentially students would go to these career fairs in hopes of meeting someone. You’d wander around, and it was just sort of like antiquated version of matching, which is not great for the employer, because they can only meet a limited number of candidates. It’s not great for students, because they don’t really have the time or the ability to truly have a conversation and to demonstrate how they’re different from the hundreds of other candidates that you’d see at one of these large university or college career fairs.

Brianne Kimmel: So what’s great is we’re actually starting to see these new platforms, like I’m an investor in dev.to. Dev.to is one of the largest communities of software engineers, and the way that it’s different than, say a GitHub or from other platforms is it’s actually more about the individual. So it’s a place where you can create a profile. You talk about your skills as a developer. You also talk about what you’re looking for in terms of culture fit, and you can write your own blog posts that are related to remote work or work/life balance, or any sort of parts of your day to day that matter in both a personal and professional context.

Brianne Kimmel: What’s great about that is you can actually start to facilitate matching that extends beyond just these are the things that I’ve done. I think LinkedIn is great in terms of having a nice resume, but the challenge with resumes is it doesn’t really ensure future happiness. So with a resume, they are data points that really communicate where you’ve been, but they don’t really communicate where you’d like to go. I think that’s where recruiting and matching is really broken, because it’s actually a way to lean into any personal biases that you have. So then you start selecting candidates based on where they went to school or what their most recent job was. But it doesn’t really communicate appetite and hunger and drive and all of these things that we look for when hiring new candidates.

Romeen Sheth: Yeah, I like the framing of kind of a historical perspective versus a future oriented perspective. That’s actually one of the things that I like that Imbellus does the most is this idea of recruiting by set in order proxy or where you went to school, what your previous job was. It doesn’t really give you a great, full picture of the story, right? But if you can start to understand how people think about problem solving, critical thinking, right? Judgment, how they exercise judgment, these are the core skills that you really want to see, right? You want to see in any sort of type of worker. It gets especially interesting I think when you actually put blind screens on top, to your point a little bit around kind of confirmation bias, right? I think you actually end up getting more interesting results based on the actual kind of first order observations that second order observations might not have gotten.

Romeen Sheth: But what are the most interesting kind of specific applications of technology you’re seeing as related to the workforce and kind of workforce productivity and what you’re most excited about today?

Brianne Kimmel: So I’ve been spending a lot of time in basically three areas. We talked a lot about new platforms for distribution and new classes of work such as streamers, influencers, and some of the new workplace applications that will tie into the gig economy. I’m also looking at distributed teams and not from the lens of do companies allow you to work from home one or two days a week, but what does it actually mean for a company to be fully distributed from day one?

Brianne Kimmel: I think we have a few examples today that have proven out this model. So we have InVision, we have GitHub, which is primarily distributed as well, and we have a whole kind of plethora of new startups that are essentially starting with distributed teams from day one, because it’s a great way to reduce overall cost. So you can remove real estate from the equation. You can hire great talent from anywhere. You are not constrained to only one or two markets where you have your HQ and maybe a satellite sales and marketing office.

Brianne Kimmel: So we’re really starting to see what are the deep mechanics to build a decentralized team from day one. That’s more on the white collar and on, in terms of knowledge work. I think on the blue collar side, what’s really interesting is we’re starting to see new applications that truly understand both centralized blue collar work, which is more factories and more kind of large companies. We also see new applications for decentralized blue collar work, which the example that I use there is a company called Earnin. Earnin is backed by Andreessen Horowitz, and they allow people to get paid in between paychecks.

Brianne Kimmel: What’s great about the model that they’ve built is they’re actually using a number of models that they’ve built to understand how many hours are you working on a weekly, monthly basis? How much money can we give you in between paychecks to actually unlock new opportunities for you as an individual? One way that they do this, which is super cool, is the actually can forecast on when are you actually at work? So they can use data from your phone, which tells you on average, you’re spending 5-10 hours, let’s say if you work an hourly wage job. You’re spending 5-10 hours at this certain company. Maybe you work at a restaurant, something like that.

Brianne Kimmel: But then you also have a side hustle where you also spend another 5-10 hours. So it can actually start to forecast how much money can we give you in between paychecks because we know the number of hours that you’re working. We see that you are fairly consistent in the hours that you work. However, like most people, unforeseen bills come up. Maybe it’s as medical expense. Maybe it’s a family holiday. Whatever might come up, there are just certain times where we need a little bit of extra cash, and they’re able to facilitate that using what they understand about the hours that you’re working and more importantly, the data that goes into this model that they’ve built.

Romeen Sheth: This has been a super interesting conversation. Granted, as we round out, I’d love to ask you that kind of Peter Thiel question as applied to the future of work which is what do you believe to be true about this idea of future of work that most people wouldn’t agree with you on?

Brianne Kimmel: I think to date what I’ve been thinking a lot about is how do we augment the way that people work today? I think that makes AI, ML, fairly approachable. I think in the short term, it’s really great for us to align on the fact that there are a number of things that we do in our day to day that are highly inefficient. But I think longterm, I’m actually very optimistic about the automation of work. What I’ve noticed in terms of understanding a lot of deep nuances in terms of blue collar work is there are just categories of jobs that shouldn’t exist.

Brianne Kimmel: I don’t believe that people should be truck drivers. When you look at the overall side effects and from a safety standpoint as far as number of car accidents, but also when you look at just the overall health of truck drivers, it’s a really, really sad job to have. I think that there’s a number of ones like this where when we start to look at different categories of work.

Historically, we haven’t had the technology to automate jobs that are, quite frankly, unsafe for people. So I think over time, I’m really optimistic in terms of automating things that are incredible unsafe. We can look at a list of these are the top 20, 40 jobs that have the most amount of workplace injuries and fatalities. We can just figure out ways to solve those problems. I think that is the starting point.

Brianne Kimmel: If I were gonna start a company today, I would start with that list. I would look at, I think another space that’s really fascinating is if you look at, when we talked about millennial males opting out of work, a huge percentage is actually driven by the opioid epidemic, which is a manmade epidemic. It’s a problem that’s impacting a large percentage of specifically American males. So how do we actually find alternatives to prescription medication? How do we disrupt certain, I would call them cartels, essentially these large, antiquated spaces where essentially, we are causing harm to the average American person.

Brianne Kimmel: So I think for me, short term, very much aligned in terms of let’s augment what people are doing today, but I think longterm, we need to automate work. We need to automate certain jobs that are incredibly unsafe.

Romeen Sheth: Well, Brianne, this has been a really interesting conversation, and I’m glad you were able to make the time. Thanks again for joining us. We really enjoyed having you on today.

Brianne Kimmel: Yes, thanks so much.

What startup founders don’t understand about developers and community building

Building a SaaS platform that 3rd party developers will love is no easy feat for startups.

Community building requires dedicated time and resources. Traditional marketing and sales tactics don’t work for developers. Customer retention can be challenging if your product is easy to rip and replace or devs can easily build it themselves.

As part of SaaS School, I interviewed Dev.to founder Ben Halpern on the evolving landscape of developer communities and best practices for software companies that sell direct to developers.

In this talk, we’ll cover:

  • How to engage with existing developer communities
  • Motivations and incentives that get developers excited
  • What it takes to build a SaaS platform that 3rd party developers will love
  • Best practices for community building and measuring success

Skim the full conversation below and don’t forget to sign up to get future essays delivered to your inbox.

Brianne Kimmel: 00:00

I’m excited to be joined on stage with Ben Halpern, CEO of Dev.to, for an open discussion on how to sell direct to developers and best practices for building a developer community.

So, Ben, we have a lot of startup CEOs in the room and for most startups hiring developers is hard.

What are your thoughts on how an entrepreneur should build relationships with developers and when does it make sense to start engaging with dev communities?

Ben Halpern: 00:24

Yeah. So, in terms of developing a community, I think it’s important to pay attention to the longterm fundamentals of marketing yourself on the internet, finding your voice, developing a brand that the people can relate to and understand that’s maybe different from some of your other customers. 

If you sell directly to developers, you’re probably going to have a different brand than if you need to hire developers, but also sell to someone else.

Ben Halpern: 01:00

And then I think it’s a lot about paying attention to your wins, and running with it, but then also just doing a lot of listening.

So, the question is I think a little different if you’re looking to hire, and if you’re looking to sort of develop a community.

But one of the fundamentals of any of these things is to throw away some of your preconceptions about where the best developers are.

Be pretty flexible about the interests, and needs of developers because if you have some flexibility you’re going to find some really great talent. And then ultimately, be the kind of company that developers want to work for, and they’re going to tell their friends.

Brianne Kimmel: 01:46

What’s interesting, so we’ve talked about this, or you’ve said it, as well, where oftentimes the projects and the things that get developers excited is sometimes very different from the things that maybe more CEOs or more revenue-minded founders get excited about.

Can you kind of talk about what are some things that get developers excited, and how is that potentially different from that of a startup’s business agenda?

Ben Halpern: 02:13

Developers are often excited by some things that seem less exciting.

If an interesting test automation tool hits the scene, developers get very excited, but test automation is a very boring thing. 

Just automating your code before it goes up so you have better visibility into whether it’s going to break.

Because developers, the more experience they have, the more pain they’ve lived through.

And the pain in software development is sort of the most memorable part.

People I don’t think act always on their favorite memories.

They sort of want to lessen the pain. So, vitamins don’t always work for software developers. Medicine and painkillers are very appealing.

Ben Halpern: 03:06

Software developers, in some ways they’re really excited about AI, ML, a lot of the trendiest sort of cutting edge stuff.

Everyone’s a little excited about that on some scale.

Some are really excited, but everyone’s pretty excited when a really polished tool hits the market that they feel actually fits their existing workflow.

They can see how they can kind of incorporate it without sort of changing everything else, without suffering a lot of pain through the process. So, when GitHub launched Actions, it really got people really excited even though it didn’t even hit the market yet at first. It was part of people’s kind of flow. It really helped their process.

Ben Halpern: 03:56

Even stuff like linting, it’s the process in software development of just sort of tabs and spaces, and linting tools get people excited. It’s funny. And it’s less different year to year than I think sometimes people realize in the startup community.

So, realizing that the most exciting things in the startup community are not necessarily the things that get developers as excited, and developers can get excited by some very boring things for other kind of people in tech.

Brianne Kimmel: 04:28

So, let’s say that one of the developer tools in the audience has built one of these painkillers for developers.

How would you go about getting taking this product to market?

How do you actually get it in front of the right developers?

Ben Halpern: 04:47

Yeah, so I think this is definitely one of those areas where things that don’t scale can really help.

Getting a few fans, users really on board really helps these things spread.

People love to give talks about things that they … that’s scored them some wins in their process, so you reach a few people who really love the tool, and can possibly give back to the tool in some way.

Leveraging open-source in that way is always helpful.

You score some wins with some of the right people, and they’re going to tell their friends.

People are going to write about it. It’s going to spread pretty naturally.

Trying to invest too much in paid acquisition, just like a lot of other startup ideas, the developer ecosystem can be chaotic.

It can be hard to kind of become sticky, and I think you do that by reaching a dedicated fan base at first, and hoping they tell their friends. And they will if it’s solving a real problem.

Brianne Kimmel: 05:57

Controversial question, but have you ever seen this go wrong?

So, you’re talking about building a community, and doing things that don’t scale which feels like a very organic way of growing, and kind of moving into more of a dev friendly company.

Have you ever seen examples, or have there been some lessons learned where either entrepreneurs or someone has tried to push into the developer community, and it hasn’t turned out well?

I’m trying to understand what is authentic versus inauthentic, and how do we balance both? Like move fast, but still maintain authenticity.

Ben Halpern: 06:30

Yeah. Authenticity is definitely one of the most important terms here.

Developers can smell bullshit, incredibly sensitive nose for that sort of thing. And it’s sometimes oversensitive.

Developers can become sort of jaded and cynical, and you try to reach them with the wrong messaging, it’s going to injure your brand.

You’re going to sort of live through some pain. Actually, I think as much as MongoDB has truly become a total success, and they’re a public company, and they’re skyrocketing in the public markets, and they’re incredibly successful, I think they suffered through some pain of being a database company that occasionally lost the trust of the community because data and trust go hand in hand.

And they worked through it. They had great relations. They stuck to the fundamentals.

They became the winner in a space that seemed like it was going to be the next big thing, and it turned out it was just Mongo plus … each of the major cloud providers has a solution, as well, in the no sequel community.

Ben Halpern: 07:57

There have been some other attempts which have sort of failed by failing to kind of work through the actually pain developers were having, and bring the product people cared about even if it was useful.

In contrast to Mongo, RethinkDB, another database, very similar model. It was an open-source database.

It lives on as a project with some popularity, but still a lot of pain, but the company folded.

They just didn’t really solidify the trust, didn’t get the messaging about why this was a really differentiated project.

I had some experience working with it. I think I remember it being a little bit more painful than it needed to be, and they just didn’t get it right even though the technology was. 

Mongo failed in a lot of the same ways early on, and I think they did a good job of maintaining trust in their brand, and understanding the more boring value propositions that sometimes people cared about.

Brianne Kimmel: 09:17

Do you feel like with Mongo, with GitHub, with Twilio, with some of the more mature companies, do you notice a different type of developer that wants to join and work at these companies?

Do you see different ways of some developers or more early stage startup individuals others want to join because there’s different problems to solve once the company starts to mature?

How do you think about the various different types of developers?

Ben Halpern: 09:42

Yeah. That’s definitely a spectrum that exists. So, I think folks in the Silicon Valley area also tend to over index on the people that fit into their physical universe, which represents a pretty small percentage of overall developers.

Twilio has always had success because they solved a lot of really fundamental problems, but I think for awhile they had a harder time reaching the more excited developer community in some way, especially after I think SMS became a little less exciting for people.

Ben Halpern: 10:30

So, at the height of maybe the chat bot excitement, maybe Twilio had a certain bit of momentum which faded a bit, but they stayed strong because they have good fundamentals. 

They’ve got sort of different markets, but it is like the people who care about the most interesting, innovative things that a company like that will do are definitely a different crowd than the people who think that the communication pipes of the software industry are the most exciting part.

And very different people, you don’t necessarily have to try too hard to overemphasize either one because if you’re clear about your value proposition, and you have a good looking brand, people are going to sort of understand.

Ben Halpern: 11:35

So, I don’t know if you want to over-communicate where you stand on that spectrum because you probably need to hire people on either one, but you should have an idea of what value you bring to each kind of person.

Brianne Kimmel: 11:47

Yeah, that’s a really interesting point.

What I love about Dev.to is the ability to communicate the things that they want to work on, or sort of the things that you’re currently thinking about versus maybe the things on your resume. 

This is really important as people are switching companies, changing careers and constantly evolving in their interest areas. 

Are you seeing any trends with decentralized companies where the need for community is sort of increasing over time? Is there a greater need for developers to connect with other developers? 

Ben Halpern: 12:26

The decentralized nature of software development, and the idea of asynchronous communication as being so important has been sort of with us forever.

The start of the world wide web had all these fascinating asynchronous conversations between Marc Andreessen who co-founded Netscape and Tim Berners-Lee who invented the World Wide Web, who represent to incredibly different ends of the spectrum in terms of software development personalities, but two super brilliant people who understood the power of the web early on.

And that same sort of fundamentals of communication, and how community happens hasn’t ever gone away, and is probably having a resurgence because of remote work, which it’s possible is just the default in our industry going forward. I would say if I were to guess that I think that would be the case, and I think there’s going to be some purpose for campuses as part of a strategy.

Distributed work, and more fundamentally, asynchronous communication as the thing that enables it is critical, and you see a lot of companies building really good tools that help with this.

Ben Halpern: 13:47

Slack is useful for both synchronous and asynchronous. There’s a paper trail. Notion is a really great product that I think solves a lot of problems.

And then GitHub for asynchronous communication was really the big one for software developers.

The part where you use Git, and merge the code, and stuff is what GitHub’s built on, but that didn’t really mean GitHub was going to be successful. But they really understood communication, and continue to kind of innovate, and build on that.

Brianne Kimmel: 14:22

Specifically with some of the earlier stage companies here today, often times you’ll have maybe a few core team members, or early founders are based in Silicon Valley, but behind the scenes, you have an army of developers either in your home country if you grew up overseas, or you start to build more remote engineering offices sooner rather than later just due to costs in the Bay Area.

What are your thoughts on some ways to not only find the right devs, but also some ways to think about employee retention, and what sort of motivates them over time?

Ben Halpern: 14:58

With remote employees, retention and motivation is probably the hardest part.

Communication has gotten easier over time, but it’s really hard to tell if someone really hates their job if you don’t see them.

We have a portion of our team remote. We have an office in Brooklyn. I don’t even go in most days.

Early on we did more in person because we just had to kind of work through less organized stuff, but eventually, saving the time on commute became so much better.

Ben Halpern: 15:53

So, we have one person that works for us full-time as a contractor now in Russia.

And I communicated with her when we were hiring her. One of my co-founders I think talked to her via video call, but I don’t even know what she looks like.

But we have tremendous communication. We have great vibes, and then we’ve also had some issues with just … we had a hard time as the home base kind of communicating with folks.

I’ve seen it really go horribly wrong in some cases where you just have no idea what’s going on over there.

You’re just praying that this distributed team is doing the things you want them to be doing, and you just go downhill, and you fail. So, you need to be sort of agile.

You need to kind of develop an understanding of what’s going on, and really over-communicate everything.

Brianne Kimmel: 17:02

Got it. So, process, communication, you mentioned Slack is great for that.

Notion can be another, as well. What about in terms of career development and mentorship?

Because I’ve seen a couple of platforms played out as one where you’re able to get mentored by more senior managers at other companies.

Do you feel like there’s a need for ongoing education? Or how do you think about retention when it comes to not only hiring, but then training and continuous education with developers?

Ben Halpern: 17:32

I think with continuous education, there’s a sense that … I would think that the hardest part is that there’s probably not going to be any singular tools which are overly effective because of the hyper specific nature of a lot of software development problems.

So, you need to sort of learn by immersion, and that’s what’s great about when you’re hired into a company with an office. You can kind of be a fly on the wall in certain discussions, and stuff.

And that’s definitely not the case as much in distributed environments. I think the most important thing for the individual developer, and for a team looking to be successful when you’re looking to have your distributed team learn, and get better, I think it’s to look for self-starters, and for developers to become self-starters.

Because there is a huge amount of resources out there, and there’s a huge amount of helpfulness from the senior development community, and they’re always being proactive. The good ones are really getting ahead of things, but people get lost when they’re waiting around for someone to kind of solve their problem.

Ben Halpern: 18:51

Me, working at our HQ, or in my home, I have a hard time. I won’t know if you’re just struggling through one little thing, and I could just quickly help you out.

You need to be able to communicate back up, like what’s going on with your day.

We don’t want to know every detail you go through. We want you to be able to kind of take a walk with your dog, and come back to your computer.

We don’t want to know where you are, but we really need to know what you’re going through. It’s those little moments that sort of push you in the right direction, and you need to kind of communicate that back up. As the founders, as the people vested in the success of our hires, and our contractors, we need to make it easy for them to do that. So, that’s kind of the dynamic.

Ben Halpern: 19:44

And then the education happens on its own throughout the community. So much of what we do is education. There’s education everywhere. GitHub, Stack Overflow, organizations that specialize in the education process explicitly, and it happens very organically as long as there’s communication, good, solid, two way communication, and ground up communication from the newer developers and stuff.

Brianne Kimmel: 20:08 

I’ve seen this in companies that have a culture focused on transparency. I think if you have a very open culture where it feels like no ask is too small, and you can kind of create these systems where it’s easy to communicate, it’s easy to ask for help without feeling embarrassed, or like you’re failing. It’s great to hear.

I think that you guys have done that really well. I think another thing that Dev has done really well is I think that by building a community you have been able to partner with other great tech companies.

Can you talk about how you work with companies like Netlify, Repl.it or Digital Ocean? 

How do you view your job as a founder in terms of helping other companies, or in terms of building long term relationships?

Because I think for this audience, what’s interesting is we’re all around the same size and same stage, and I think there’s an opportunity to either do things as tactical as coming together for a hackathon, or just really starting to build the community from day one.

Do you have any thoughts on how you started that from the beginning?

Ben Halpern: 21:15 

In terms of successes and failures in partnerships, and getting along with organizations, I think consistent learnings for us have been to walk away from discussions with some next steps.

Even if they’re the simplest things, and even if it’s … be good at having the right ask. You’ll leave a conversation with someone, and you’ll be like, cool.

You should start using our platform creatively. It’s hard to stoke creativity in people.

If you’re creative with our partnership, it’ll go great because you have all these tools we have for you.

But that sometimes doesn’t go far enough because people get busy with other things, things come up. So, some very simple takeaways is to kind of get the ball rolling, or help momentum happen, and stuff like that.

Ben Halpern: 22:17

I was just talking with an important contact this morning at a big tech company who would love to be kind of using our platform to help communicate with their developers, and things like that.

At the end of the conversation, he said, “How can I kind of help you today as much as possible?” And that’s kind of been a hard question for us to answer. Just like, I don’t know. Just be awesome. Be a good community member, and stuff.

But knowing that the vaguer it is, the less likely anything will happen, I gave some really boring things that they could do this afternoon that would just be helpful for us no matter what happens with our relationship.

One of those things was I asked them to put the Dev logo on their personal homepage just alongside Twitter just as a totally arbitrary, specific ask. But it sort of cemented like, let’s do one thing together, and then the next step, and the next step.

Ben Halpern: 23:18

Even though you could go in any number of direction, having a simple step zero with any relationship is incredibly important. It’s similar to kind of on-boarding a new user.

They’re not going to start becoming a power user on day one, but you want to give them a few simple steps to get started with your project, and then ultimately things happen through various a-ha moments along the way. Relationships build.

People kind of learn the tools, and understand the nuances, and that’s never going to happen if you’re just constantly expecting them to figure it out on their own, or leaving things vague because then you’re just going to kind of forget about it, and go home.

Brianne Kimmel: 23:59

I think that’s a really interesting point. I feel like with a lot of startups, we typically wait for awhile before we start to approach the big tech companies, or start to think about partnerships, or working directly with them.

I think oftentimes it’s like prioritization. How important is it to start building those relationships? And also how actionable is it going to be?

Because I think a lot of times when talking to some of the large tech companies you can kind of get into … you kind of go down the rabbit hole of meeting after meeting after meeting.

When would you recommend starting to build these relationships?

And what have been some ways where you able to kind of solicit those next steps, and make sure that there was followup?

Ben Halpern: 24:43 

This sparks some good thoughts about our absolute origin stories when it was just me. Not even our, just me sitting around. But you’re always going through different origin stories, so I think things like this kind of help it, a kind of new beginning.

But when I had the Twitter account, I had a bit of a following. I had this new kind of blog I was writing on, and stuff. I had the idea that if I interviewed some bigger names, that they would share the interview after that, and that would be a great way to kind of build things.

Interviewing someone via blog was good, and I understand the issue. I’m a good communicator. I felt like if I have some good questions, it would be good content.

Ben Halpern: 25:32

So, I just emailed some huge names, and they responded. Literally, at that point I got 100% yeses. I emailed the right people. I didn’t even propose an interview. I just proposed me sending them a couple questions via email for them to answer, and then just let’s kind of treat this as if it were an interview, but I’m going to make it as simple as humanely possible for you. Just making the yes as easy as possible.

Before there was any traction, I got David Heinemeier Hansson, the founder of Basecamp, and the creator of Rails to do an interview. He was excited because they were about to launch Rails 5, and he wanted to get some of his thoughts out. And that was like an easy yes.

Ben Halpern: 26:28

I’m shy, introverted. I have to kind of work up the courage to do stuff like that, but it works if you understand that the person on the other end is going to say yes. A little self reflection in that way really goes a long way.

When you get an email, and it’s actionable, the ask is easy for you to do with your own knowledge, software developers I know just love blabbing about their things, like what we’re doing right now.

And making the ask easy, and simple, and within the person’s wheelhouse is great. I’m also kind of in a conversation with someone who proposed a fun little collaboration, and I’m actually personally struggling through it because I want to do it, but it’s requiring us both to be creative, and figure things out, and I would’ve kind of preferred if there was a very specific ask

Brianne Kimmel: 27:53 

With developers, it feels like there are blurred lines between personal and professional. 

You can build a personal following for your open-source projects that you’re building for your company.

Do you kind of lean into the personal plus professional, where you’re building relationships with the individual who may or may not stay at that current company?

They may go to a different company. How do you sort of view relationship building when it comes to the personal, and the professional side of things?

Ben Halpern: 28:41

Yeah. I definitely think that’s pretty key to everything. I have a friend at Microsoft at Azure, and when I met her she was at Google. Now we’re the total competitor in that specific space. And that was cool, and we kind of have to understand there’s a lot of fluidity there.

Most business relationships are more personal than professional really, honestly. People want to do business with people they can be friends with, and stuff. I think it’s important to understand appropriate boundaries for even just any personal relationship.

So, you have a relationship that’s different from being best friends because I don’t think it’s necessarily healthy if people just do work with their friends. But you know, seek out the personal relationships with a variety of people that they can have in their lives, and ask personal questions. Get coffee, and don’t talk only about the work or the opportunity. And that’s led to a lot of our success, my success, just being friendly, offering to help on things that don’t have an obvious payoff.

Brianne Kimmel: 30:13

Yeah, that’s a great point. I think that speaks a lot to also the format of this event, and why we’re hosting it at GitHub. So, GitHub, that’s part of their core ethos, and they still deliver on that to date. Where I think like you said before, when you invest in non-scalable things, and when you proactively bring people together, there’s always a nice support group, and people who are willing to be helpful. We’re super grateful to have this space, and love the work that GitHub is doing to actually just facilitate these conversations, and bring people together. So, that’s great. Ben, thank you. 

Hosted by Brianne Kimmel and Ben Halpern.

Ben Halpern is the founder of Dev.to, one of the fastest growing communities for developers with 1.8 million unique visitors per month. Ben has written over 500 blog posts for developers and his Twitter handle @thepracticaldev is one of the most popular sources for developer news and education.

Follow Ben on Twitter: @benhalpern

Brianne Kimmel is an angel investor and startup advisor in Silicon Valley. Brianne previously worked on the go-to-market team at Zendesk focused on self-serve revenue growth, technology integrations and built Zendesk for Startups.

Follow Brianne on Twitter: @briannekimmel

This talk is most relevant for APIs, payment & e-commerce solutions, code editors, data & analytics tools, testing suites, deployment & hosting infrastructure and more.

For more thoughts on startup growth and go-to-market, sign up to get my newsletter delivered to your inbox.

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Distrust has gone viral! What companies can learn from Fyre Festival and the new sources of trust for consumers

The release of two Fyre Festival documentaries on Netflix and Hulu has sparked a much needed debate on consumer trust and the misaligned incentives between influencers and their followers today.

In my presentation Distrust goes viral, I present an in-depth look at recent events where distrust has been amplified by millions of people in a matter of seconds including:

Why Fyre Festival is a pinnacle moment for influencer culture and late-stage capitalism   

What happens when an ultra-exclusive event backed by the world’s most popular Instagram influencers ends in disaster as thousands of ticket holders, some of which paid up to $250,000 to get last minute tickets, are stranded on a remote island in the Bahamas…

Distrust goes viral. 

This is the first time we’ve seen lawsuits citing “100 Jane Does” — 100 unnamed influencers who promoted and posted about the festival. One lawsuit claimed these influencers acted “with negligent misrepresentation, fraud, breach of contract for failing to ‘provide the festival experience as promised’ and for ‘misrepresentations’ that caused people to purchase tickets.’”

What happens when major corporations like Samsung face distrust on a global scale 

Following multiple instances of exploding devices, we’ll look at the data behind the recall of 2.5 million Samsung Galaxy Note 7 devices.

Distrust goes viral. 

Why United’s “Fly the Friendly Skies” slogan failed to deliver on multiple occasions. 

We’ll explore why celebrities like Seth Rogan and Chrissy Teagan tweeted about the unfair treatment of two young girls who were barred from boarding a United flight and the infamous passenger removal on United flight 3411 where a paying customer was dragged off a plane.

 

Here we see two situations in less than one month where a company put policies before people.

This is a scary time for companies. Every private conversation can we shared publicly in a matter of seconds. 

Every interaction that we have with our customers is critical and this is the new reality. So what can we do? 

We’ll look at the new sources of trust for consumers today:

  • People trust themselves
  • People trust friends and family
  • People trust people like them

Distrust goes viral was originally presented at Pioneers Tech Conference just after the shocking events that unfolded that Fyre Festival.

Read the transcript with slides below or watch the video.



This summer, all eyes have been on one specific event…

 

 

 

 

 

 

 

 

 

A festival on an island in the Bahamas: an ultra exclusive venue with amazing accommodations and backed by some of the most popular influencers in the world. When you look at this event, it looks pretty incredible. 

As we go through the festival lineup, we see major acts that we would expect to see at Coachella but without the lines or the crowds. VIP packages including airfare and luxury tent accommodations for US$12,000 and last minute sold for up to $250,000 per ticket. 

The best part about Fyre Festival? It was backed by the coolest celebrities and Instagram influencers, you had to be in the know to hear about it. From Kendall Jenner’s post alone, Fyre Festival saw 6 million unique impressions.

Celebrities, influencers and models created a total of 78 million impressions to promote the event. 

Following the social media push led by celebrities and influencers, traditional publications fast follow with earned coverage promoting the ultra-exclusive festival that everyone is talking about.

Let’s go back to the beginning. A remote island, an elite crowd, two unforgettable weekends. What could possibly go wrong, right? Well, let’s look at what really happened.

You’d expect beach-side bungalows in the Bahamas and a great place to stay for those two weekends. Well, what actually happened is we start to see a disaster is about to unfold.

The dining experience. A very important part of a festival experience because you want every moment to be Instagram worthy. So let’s just take a couple minutes and look at these cheese sandwiches. What a joke. 

Finally, we see a price tag for celebrity endorsements.

Jenner was paid $250,000 to promote this event. For Jenner fans, this news is disappointing.

For influencers and celebrities, lesson learned. It’s your job to protect your audience and keep advertisers honest.

The FTC has previously brought cases against Warner Bros.Sony and the fashion brand Lord & Taylor over influencer-centric marketing campaigns, but never against individuals. In the case of Fyre Festival, we see lawsuits citing “100 Jane Does” — 100 unnamed influencers who promoted and posted about the festival.

One lawsuit claimed these influencers acted “with negligent misrepresentation, fraud, breach of contract for failing to ‘provide the festival experience as promised’ and for ‘misrepresentations’ that caused people to purchase tickets.’”

 

One day before the festival, the talent cancels blink-182 pulls out completely. They say, “We’re sorry, this isn’t the type of festival we want to be involved in.” But for someone who has already bought tickets and booked their flights, it’s a little too late. You start to imagine who actually organized this thing and how is this even possible?

Well, we look at the event organizer, Ja Rule.

In his public statement to talk about the festival, he makes two really bold claims.

He says, One: “This is not a scam.” Two: “It’s not my fault.”

So as the co organizer of this event, it’s all hands-off. Sorry, I don’t want to take the blame for this.

Next, we look at the main source of truth. People on the ground.

These are two tweets coming from someone who bought tickets to this festival. She’s tweeting from the plane saying, “Look, I’m stuck on a plane. The government won’t let me in.”

Next one, “I just heard they are emptying our plane and literally rescue people are coming.”

As she’s live tweeting from this event, there are millions of people watching on Twitter and waiting for the full story to unfold. 

Every interaction has the opportunity to go global.

In a matter of seconds, any situation can be amplified by billions of people, but this isn’t the first time that we’ve seen this happen.

Let’s look at the Samsung Galaxy Note 7, it’s a cool product from a trusted company.

 2.5 million phones were recalled after live videos, tweets and photos went viral on social media. 

My personal favorite, you can see here a new slogan for the Galaxy Note 7: Now our technology explodes. Not ideal right? Now as we zoom out, you can see each spike is a new video being posted on social media. 

 

The major spike at the end is one short video coming from a Burger King in South Korea.

Millions of impressions and thousands of people jumping into the conversation.

This is truly a disaster for Samsung.

We have one more example. Trust keeps going viral.

United has invested a lot of time and money to create a “customer-centric brand.” Fly the friendly skies. 

The photo is pretty graphic, but it’s impossible to ignore. If a company sells you on “fly the friendly skies,” and this is your personal experience, you’re going to think twice before flying with them again.

The expectation of flying the friendly skies was much different than the actual reality.

When we zoom out, here’s where things get really interesting.

Most people don’t know this wasn’t the first time United had this sort of situation.

It was actually the second one in one month. 

Leggings Gate was situation where two minors were not able to board a flight with their parents because they were wearing tights. As you can see from this situation, big companies put policies ahead of their people, and it’s really frustrating.

As we look at the three examples that I’ve shown, a really powerful quote comes to mind.

Trust takes years to build, seconds to break and forever to repair.

“If we take a step back and we think about trust, it is the core component to all relationships. Whether it’s personal or professional, we will not last without trust.

Nothing works without trust, so when we apply this to the recent examples that we talk about, trust takes years to build, it takes seconds to break, and it takes forever to repair, but imagine amplifying that by millions of people.

This is a really scary time for companies. Every private conversation can we shared publicly in a matter of seconds. Every interaction that we have with our customers is absolutely critical, and this is the new reality.

 

In 2017, distrust has gone viral. Companies are afraid to talk to their customers because the stakes are so incredibly high. We’re afraid to deal with those sort of situations. So the question becomes, what can we do about it?

How do we build trust and how do we make sure that our customers enjoy talking to us, and they feel a sense of trust with us? We need to figure out ways to speed up this process. At startups, how do we build a company that’s trustworthy from day one? Let’s take a look at the data.

The number one source of truth for people? It turns out people really trust themselves. Sampling a product or service is the most trusted source for information today. Product samples and free trials for software are the new norm. 

People trust themselves 

People want to see things for themselves. They want to try before they buy. If you have a tangible product, they want to experience it and make sure that it’s legit. People also care about word of mouth, editorial content and reviews

Let people get to know your product before you expect them to pay. 

Don’t try to sell them the full suite without getting them first using the base features. Next thing to think about is easy refunds and cancellations.

Now, from a company perspective, this can be really hard to deliver.

Refunds can be costly. Cancellations are annoying. We don’t want to have to deal with these two things, but building trust is a long-term game there are no shortcuts. 

Let’s look at Amazon. Each individual feature is outlined, and it’s very clear to see that with Prime you’re getting more bang for your buck. You can also see very clear and transparent pricing. You understand that you’re able to try this product, and you’re able to cancel at any time. There’s no frills here. It’s just the facts.

Get in, try our product, and if it’s not right for you, cancel. 

People trust their friends and family

In fact, 92% percent of consumers trust recommendations from their friends and family over traditional forms of advertising. We need to figure out ways to get our friends and family to talk about products.

For startups, this is an area where we can move faster than big companies. We don’t need major brand campaigns.

What we actually need is to build trust with our customers from day one.

For big companies, this is a very scary challenge. No longer can we hide behind major brand campaigns. We need to figure out ways to make sure that our experience matches what we’re claiming and advertising.

Let’s look at an example from Strava, the fitness activity tracking app, which has a highly engaged community of runners, cyclists and athletes who track their progress and cheer each other on. 

In addition to tracking your progress on Strava, you can also push all of your updates to Facebook to share with an even group of friends and family.

People trust people like them

When you think about it, we’ve had enough of experts and paid influencers.

We’ve seen first hand with Fyre Festival that experts have their own incentives and sometimes those incentives are misaligned with their followers and constituents. 

Following Brexit, we’ve seen everyday people gaining power and influence in a country where government trust has been declining.

For companies today, the success of your company is truly in the hands of our customer, and when we look at the data here, you can see that a person similar to yourself is on par with an academic expert and with a technical expert.

Everyday people have power and influence.  

 

People trust people like them. 

Every company today needs to have a review strategy. Listen and engage on sites where people are talking about your product. It’s also also important to collect reviews in a controlled environment, build feedback and reviews into your core product experience.

Rent the Runway is a clothing subscription company and the great thing about the runway is they offer designer dresses for a reasonable rental fee.

Rent the Runway’s initial wedge into the market was weddings and formal events, so the stakes were high for them to get the customer experience right. Size, fit, delivery time and quality all matter. Through the use of profiles, Rent the Runway is able to leverage user-generated photos and reviews to build trust with customers.

Consumer reviews are also becoming increasingly important when you’re selling B2B software.

G2 Crowd aggregates reviews from everyday people who use specific tools at work everyday. These unbiased reviews create a trusted source for individuals who are buying software for their company. The stakes can be even higher at work, you are putting your professional reputation on the line when you choose a new vendor.

 

Sadly, companies can easily find shortcuts and ways to game the new sources of trust thus perpetuating the complicated relationship between companies and their customers. Let’s look at the dark-side of reviews:

In May 2018, BuzzFeed Technology Reporter Nic Nguyen conducted a deep investigation inside Amazon’s fake review economy where third-party merchants pay on average $4 to $5 per review, plus a refund of the product, to individuals who willingly write positive reviews irrespective of their personal experience with the product.

“The systems that create fraudulent reviews are a complicated web of subreddits, invite-only Slack channels, private Discord servers, and closed Facebook groups, but the incentives are simple: Being a five-star product is crucial to selling inventory at scale in Amazon’s intensely competitive marketplace — so crucial that merchants are willing to pay thousands of people to review their products positively.”

One listing read, “The reviews don’t need to be verified or anything, so the task won’t take more than a minute of your time. I will send you the link to the product, you go and leave a brief 1 star review, and that’s it. I will pay $5 to you through Paypal as soon as the review is live on Amazon.”

In 2019, distrust has gone viral and every interaction we have with our customers is critical. 

One private conversation with your customer can be shared with millions of people in a matter of seconds.

My challenge to you: stick to the sources of truth. Now that we understand what it takes to build trust with our customers, let’s build trust into our product and let’s keep calm under pressure.

Thank you.

Companies and products mentioned in this talk: 

Fyre Festival – A music festival scheduled to take place on the Bahamian island of Great Exuma over two weekends in April and May 2017. Organized by Fyre Media founder Billy McFarland and rapper Ja Rule as a luxury music festival to promote the Fyre music booking app, the event was promoted on Instagram by “social media influencers” including socialite and model Kendall Jenner, model Bella Hadid, model and actress Emily Ratajkowski, and other media personalities, many of whom did not initially disclose they had been paid to do so.  Learn more here. 

Samsung Galaxy Note 7 – a now discontinued Android phablet smartphone that was produced and marketed by Samsung Electronics. On 2 September 2016, Samsung suspended sales of the Galaxy Note 7 and announced an informal recall, after it was found that a manufacturing defect in the phones’ batteries had caused some of them to generate excessive heat, resulting in fires. Learn more here. 

United Airlines Flight 3411 incident – On April 9, 2017, O’Hare International Airport Aviation Security Officers forcibly removed passenger David Dao, from United Express Flight 3411, after Dao refused to leave the aircraft as airline staff insisted. Aviation Security Officers were called and dragged him off. Dao screamed as officers pulled him out of his seat, and his face hit an armrest during the struggle. Officers then dragged him, apparently unconscious, by his arms on his back along the aircraft aisle past rows of onlooking passengers. Learn more here.

Why AI is underhyped, selling to other startups is a Silicon Valley crutch, and more with DFJ Partner Josh Stein

I recently joined the Venture Stories podcast with Erik Torenberg, co-founder and partner of Village Global, and Josh Stein, partner at DFJ, to discuss how the SaaS landscape is changing and where the opportunities are for early stage founders and investors.

In this episode we’ll discuss:

  • Why inherently viral products still need a traditional sales motion
  • The irony of 20 year old founders selling to the enterprise
  • Why selling to other startups is a common crutch in Silicon Valley
  • Unsung heroes at the fastest growing software companies
  • Why autonomous vehicles may be the greatest productivity enhancer 

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Listen now on Breaker  and get the full transcript below:

Erik Torenberg: Hey, everybody. It’s Erik Torenberg, co-founder and partner of Village Global, a network-driven venture firm.

This is Venture Stories, a podcast covering topics related to tech and business with world-leading experts.

I’m here today for our first episode of SaaS Stories. I’m here today with one of our Village Global Network Leaders, Brianne Kimmel, angel investor, previously go-to-market growth at Zendesk, and special guest Josh Stein, a managing partner at DFJ. Guys, welcome to the podcast.

Brianne Kimmel: Thanks so much for having us.

Josh Stein: Yeah, thanks.

Erik Torenberg: The illustrious Venture Stories Podcast. Let’s get into it. Why don’t we start with some brief introductions and, broadly, where you guys are most excited right now investing in SaaS, what trends, or where you’re most excited right now?

Brianne Kimmel: I’m Brianne Kimmel. I was most recently at Zendesk. I focused on self-serve growth, technology integrations and built Zendesk for Startups. I’ve been spending a lot of time looking at enterprise applications, particularly ones with a bottom-up sales motion. I look for companies that sell directly to the end-user of the product. That’s where you’ll see a product-led growth strategy, where users discover the product through consumer channels like social ads, search results or content marketing, and ultimately sign up and use the product without talking to a sales person.  

Erik Torenberg: Just to unpack that a little bit for you guys that may not know, previously, it was more top down? Or, explain that transformation a little.

Brianne Kimmel: If you look at companies like Zendesk or Dropbox, the acquisition channels look a lot like a consumer tech company. They’re investing in paid marketing including SEM, SEO and targeted landing pages to acquire very specific types of users. 

I think what’s interesting is we’re seeing a consumerization of SaaS, which I hate the term, but business applications need to have a differentiated brand and high brand awareness so consumers choose to use your product at work. 

In this shift, we’re seeing consumer trends impact the workplace much faster because employees have more power and control over the tools they use on a daily basis.

Josh Stein: That is a whole rich area we should dig into. It’s really about a change in the buyer, which I think you see reflected in the product and also in the acquisition and distribution. I’m Josh Stein. I’m one of the partners at DFJ. I started out on the operating side. I cut my teeth as a product manager at a software company in the mid-90s and was a VP of sales. I started a company in ’99, where DFJ actually led my series A, so, I’ve been working with the team there for almost 20 years. Joined as a partner in 2004, and I’ve led a lot of our SaaS investments.

I was the first investor in Box when it was three people. I was the first investor in SugarCRM when it was three people. I’ve led investments for us in companies like LaunchDarkly, Twilio, Talkdesk, Periscope Data. I’m kind of a SaaS nerd. I just love the software business and subscriptions make a ton of sense to me. High gross margin, recurring revenues. 

Erik Torenberg: Totally. Let’s unpack what we’re talking right before, the change in the buyer. Let’s riff off that.

Brianne Kimmel: Yeah, that sounds great. I have a question for Josh, actually. I think what’s interesting is when you look at a company like Box, Box had a very different go-to-market than, say, a competitor like Dropbox.

Josh, you’ve been really instrumental in helping founders answer tough questions: Should we have a bottoms-up sales motion? Or should we invest in enterprise-level features that allow us to go straight for large companies?

Josh Stein: Yeah, it’s a really interesting thing. So if you go back like 20 or 30 years for traditional software, it was a long sales cycle. It was a six or seven figure license deal, you were selling to a CIO or a VP level.

Then there was this change that really came as a result of the products being delivered over the web through SaaS or through the iPhone, through a mobile app store, where much lower level people could find a technology they liked and bring it in to the workplace themselves.

It almost kind of short-circuited the traditional IT buying cycle, which was very threatening to IT and to CIOs, originally, although, they’ve kind of gotten behind it.

Josh Stein: With Box, the thing that actually was the huge inflection point for us was actually at the launch of the iPad, because all of the sudden you had people coming into … It sparked the imagination of really everybody.

You had people coming into the workplace saying, “How can I use this awesome device in my job?” It was really hard to actually get content onto the iPad, because it doesn’t have a traditional file system. You can’t just plug it in like it’s a USB drive or something.

Josh Stein: Aaron just absolutely nailed that. When the iPad was announced and then when it was launched, we were ready to go with an app. It very quickly became this way that you could get professional content on the iPad.

The trajectory of the business just absolutely exploded from there, but it wasn’t CIOs coming to us and saying, “Hey, I want to buy this for my organization.” It was group leaders, or individual contributors that were pulling it in.

Josh Stein: Then, much like you were mentioning with Dropbox, it’s an inherently viral application, because you’re collaborating with other people, so you would see this spread within organizations.

Interestingly, that was responsible for much of Box, and I would argue, Dropbox is probably like the most extreme example of getting to scale with that kind of a model, but it’s not what gets you typically to a billion in revenue.

Box, today, the way they go to market is totally different than that. It got them to the table, but it’s not what got them to where they are now.

Brianne Kimmel: I think that’s a really interesting point. I think specifically for founders who are based in the Bay Area, you can hit a certain level of traction by just selling to other startups.

I think what’s great there is that you can get early user feedback and there’s some really great points when you’re selling to a very technical audience or people who have very good understanding of what you’re trying to achieve.

I think one of the risks that you potentially run, though, is if you wait too long to start selling outside of the Bay Area, then it’s like you actually haven’t talked to any CIOs, you don’t necessarily know what’s required for enterprise. 

Josh Stein: And it’s totally different, right?

Brianne Kimmel: It’s totally different. For seed stage companies, I highly recommend talking to enterprise buyers sooner, rather than later.   

Before you go out to raise a Series A, you should have a good idea of what your traditional sale motion will look like: list of target accounts, enterprise pipeline and current traction outside of the Bay Area.

Keep in mind, the sales cycle is much longer so this should be built in parallel with your bottoms-up sales motion.

There are also some feature requests that come with it, so it actually starts to change how you’re building and developing your product over time.

Josh, how do you think about this for Series A companies?  

Josh Stein: I would say a lot of founders, most of the founders, we interact with are product-oriented people as opposed to go-to-market people. That’s the more typical profile. Many of them, as you alluded to earlier, are quite young and they maybe haven’t even worked in a large organization, let alone sold to a large organization.

You know, Aaron, famously, was 20 when we backed him at Box. That’s not an atypical … You were mentioning the founder of Mixpanel.

Brianne Kimmel: Yeah, Suhail Doshi as well. He studied engineering from 2006 to 2009 at Arizona State, worked at Max Levchin’s company Slide for a months, then joined YC to build Mixpanel.  

There are a lot of 20-year-old enterprise CEOs, which is interesting, because that’s younger than an SDR.

You wouldn’t send an SDR or maybe even an AE into these sorts of conversations, and yet the CEO is significantly younger than everyone in the room.

Josh Stein: I think a lot of the companies start with some user-driven, product-driven insight about, hey, there, should be a better way to accomplish this task, or this thing I’m trying to solve for. But then it’s almost like a filter for companies, whether they can scale to that next level is, can they transition to dealing with what the enterprise needs

For example, enterprises care a lot about security. Enterprises care a lot about manageability. If you’re selling to a General Electric or a Ford Motor Company, they might have 1,000 employees leaving and departing every day, and how you think about managing those permissions.

If they have to manually do that within your application, that’s a complete non-starter. They’re going to have Active Directory, or Okta, or whatever it is that they’re integrating with, and you have to fit into that kind of a scheme.

Josh Stein: I think the unsung heroes in a lot of these companies are the people who partner with the product founders to help take them to that next level.

At Box, that was Jim Herbold to a large degree, who joined Box when we were about $1 million or $2 million in revenue and took us to $200 million, which is almost unprecedented from a VP of Sales tenure.

I wasn’t directly involved with Dropbox, but my sense is that that Dennis Woodside had a big role there in helping Dropbox make that evolution. That’s something that we see very consistently, is the founders that make it are the ones who can bring in that talent and listen to that talent to bolster the gaps in their own knowledge.

Josh Stein: I’m really curious. I know one of the things you did at Zendesk was working on the logo and getting that. The logo was awesome, right? The Buddha was kind of cool and cute, but that’s not an enterprise-y logo, I would imagine. Was that related at all?

Brianne Kimmel: Yeah, absolutely. When Zendesk went public, the logo was a Buddha wearing a headset. Highly differentiated and loved by early customers, but long-term not the most culturally appropriate.  

 As we started to expand into new markets, in particular Southeast Asia and India where we faced local competition from Freshdesk, we were mindful of this both in terms of international expansion and our enterprise positioning. 

I joined Zendesk to work on the rebrand where we decided to send the Buddha named “Buddhy”  on a really long vacation. We had to be careful with the messaging here because we had built such a strong brand that our customers loved the Buddha.

In addition to the rebrand, we also went from one product to seven products. We had already been experimenting with live chat and other omnichannel solutions for customers, but we chose to roll out a single suite to build a stronger offer for enterprise buyers alongside the rebrand.

 

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Josh Stein: You know, one thing I spent a lot of time with our founders talking about is, the thing that gets you from zero to one, or let’s even, $1 million of ARR, to $10 million of ARR, is rarely just 10 times what gets …

Doing that 10X is not what gets you from 10 to 100. It’s usually a whole different set of tricks, both in the product but also in the go-to-market.

I think that’s a counterintuitive thing for founders, particularly when they’re having a lot of success. I have never seen more companies in my 15 or 20 years in the business that are hitting a million of ARR and growing 20% month over month, or hitting even $5 million of ARR and growing at 10%+ month over month.

There’s a lot of them out there, but I also see a lot of them where I can see the wall that they’re heading towards. It might be their acquisition channel is just, there’s some limit to the number of people that are searching on Google for the terms that you’re looking for.

Or there’s some limit of people that you’re going to be able to hit with the certain type of calling that you’re doing. At some point, you’ve got to figure out, what’s that next go-to-market motion that I can add?

The degree of awareness about that is radically different.

So, I think one of the things that we can do as investors and sort of advisors to these founders is, I try to actually just introduce them to lots of people who have gone through that journey, because it’s one thing hearing about it from me or hearing about it on a podcast, but when you sit down with other successful entrepreneurs and they say, “Yeah, actually, you know, if we hadn’t done outbound sales, we wouldn’t have gotten there.”

Erik Torenberg: From a market perspective, when do you look at a company and say, “Hey, I see this wall they’re approaching and we can help them fix it,” or, “I see this wall they’re approaching and we can’t help them fix it.” Besides a founder’s ability to take your advice and implement it, just from market perspective, how do you make that decision as whether to go with it or not to?

Josh Stein: We spend a lot of time talking internally at DFJ. I think one of the biggest risks right now as an investor is not that companies fail, per se, and that they you can’t even get to break even. It’s that, I think, a lot of companies, unless they make pretty pivotal moves, are going to get stuck at $10 or $20 or $50 million in revenues.

Part of the challenge for, I think, both founders and investors alike is that 10 or 15 years ago, there was a market for those companies where you could get acquired or you could even go public at 50 million in revenue.

Josh Stein: The bar to go public is much higher today. Acquisitions at that level really aren’t happening that much, and when they are, they tend to be more product-led acquisitions, where it’s more about acquiring a team and a technology, not necessarily the revenue. The problem is that the larger software companies are so big that to move the needle for them, even a $50 or $100 million revenue barely does it. If you talk to Salesforce, or Workday, or some of the larger companies, they’re looking for businesses that can be a billion in revenue in, call it, three or four years. That’s sort of the metric that they’re looking for.

And that’s a really hard metric. If you’re selling, for example, a solution to a vertical market like restaurants or insurance agents, you have to be very careful that you have a big enough that you can expand to beyond that.

One of the things that I really resonated with with Box or with SugarCRM or, I would say, Yammer or Talkdesk is that they are very broad solutions.

Josh Stein: I’ll take Talkdesk as an example. We sell a cloud-based call center solution. It’s built on Twilio, which is kind of fun, because it’s another company we’re involved with. But lots of companies have call centers across all kinds of industries, and so you’re not just limited.

Now, if Talkdesk was more specific to only doing call centers, let’s say, for the travel industry, I think that would be much tougher to scale, right? I think you have to make sure that you’re going after a broad enough opportunity. Even if it’s not what you’re doing initially, you have that kind of vision for where you’re going to possibly be able to go.

Brianne Kimmel: What’s interesting with Talkdesk too, I know, you have a two-person board?

Josh Stein: Oh, yeah. That’s atypical, but yeah.

Brianne Kimmel: That is very atypical. It’s a very atypical company. So, Talkdesk actually started as a Twilio hackathon project. I think what’s interesting is that, I would say, their go-to-market is primarily enterprise?

Josh Stein: Today, yes.

Brianne Kimmel: Today? Did they start out with more of a bottoms-up, self-serve business?

Josh Stein: 100%. Interestingly, as an analog to what you did with the Zendesk brand, Talkdesk’s original tagline was “a call center in five minutes,” which is awesome, and in fact, they can give you a call center up and running in, maybe it’s not five minutes, but it’s really close to that.

But that’s not an enterprise pitch at all. In fact, I would argue that that’s potentially a liability.

         

Tiago, I think, really got ahead of that and rebranded the company to compete much more against the legacy incumbents. He has a fabulous story to go do that.

So, the business of Talkdesk today versus where it started out is absolutely totally different, but I think a lot of the same characteristics carry through. For example, I think both with Box and Talkdesk, one thing that you see is the legacy competitors, like for Box, it would be, let’s say, a Documentum. Those products were fundamentally engineered to make the buyer happy, the buyer being the CFO or the CIO.

Effectively, management. Box and Talkdesk were engineered to make the users happy. Much more the way that we think of modern web design, so people don’t hate their jobs, because they’re using a product that actually is intuitive and easy to learn.

I think, as Box and Talkdesk have scaled up to the enterprise, they’ve figured out, how do we speak the language of the C suite buyers, but they haven’t lost that how do we make a product that users actually love using.

I think that that’s like a really … That’s their secret weapon in competing against the incumbents, because, it’s hard when you’re going to the enterprise, especially when you’re making that transition initially. One of the things you have to remember about big companies is they’re really risk-averse.

If you’re working for a Fortune 500 company, you might get a little bit of a pat on the back for bringing in a new technology, but if you bring in a technology that creates a security breach or takes down the operations, you’re fired, right? So there’s this hugely asymmetric risk/reward.

You’ve got to really make it easy for people to say, “I want to take this leap.” It’s got to be either a lot easier to use, offer them new capability that they couldn’t otherwise have, a lot cheaper, or some combination of all three.

Erik Torenberg: I’m curious, if you could talk a little bit about, Josh, how your job is different than it was maybe a few years ago, in terms of maybe the different types of companies you’re seeing, looking for, investing in? Maybe how this stage has evolved? Just, how has your job changed?

Josh Stein: I think it’s a really wonderful time to be an entrepreneur, truly. When I started my company back in ’99, just getting live with a customer cost us $5, $6, $7 million.

I mean, we spent $2 or $3 million bucks on infrastructure. We were buying Sun Servers and Cisco routers and Oracle databases and all that stuff. Now, you have AWS, you have Twilio. The friction is so low.

On the go-to-market side, the reason we’re seeing so many companies getting to a million of ARR, often on $1 million of capital invested or less, is because the infrastructure is cheap and the distribution has gotten so cheap.

One of my really old friends is Naval Ravikant. We used to kick around startup ideas. 15, 20 years ago, he would run ad campaigns for non-existent products just to see what the response rate was, like with Google AdWords, which a lot of people do that now. I just think it’s so brilliant to be able to do that.

When I was starting my company in ’99, you really had to build the product based on like customer interviews and hope that you got it right and they would buy it, and if you didn’t, the iteration cycle was much longer. So, the frictions for entrepreneurs are so much lower.

Now, the flip side of that is there’s also a lot more competition. Right? I think, there’s also probably more things competing for buyers’ attention than ever before. Just breaking through the noise is very, very hard. I spend a lot of time talking to founders about, how do you position yourself so you can have that kind of breakout effect? There was a moment, probably, what, three years ago, when Slack, I would argue, hit that point where you could sort of tell. People were like, “Oh, I’ve heard about that Slack thing. I think I want to try it.” They were actively wanting to try it because they had heard about it. That pull is so rare, but when it happens is when you see companies dramatically accelerate. We spend a lot of time working with companies, how are you going to break through that kind of noise? There’s so many things competing for the attention of the buyer.

Erik Torenberg: It’s interesting, too, because I feel like in the Bay Area we hear a lot about Slack, but if you leave the Bay Area, you hear a lot about Microsoft Teams.

Josh Stein: Oh, yeah.

Brianne Kimmel: I think when you go into the enterprise, the Microsoft lock-in is a real thing. You might not have it here because I think oftentimes, especially startups, mid-market companies, we’re able to choose our own tools and that’s fine, but once you go to the Fortune 500, Fortune 100s of the world, there still is such a thing as having a true relationship with Microsoft, you can only use Microsoft related products, and that’s something that’s been really hard for the Slack Enterprise team. Do you have thoughts on lock-in, and is that something that you encourage your companies to start to build and aim towards?

Josh Stein: First of all, I couldn’t agree with you more about the Valley echo chamber versus the broader world. I think Microsoft is a company that is not as much part of the conversation here in the Valley often, but from a corporate enterprise, global 2000 standpoint is incredibly dominant. The Microsoft sales force and the teams that they have covering those accounts is a formidable opponent, and I would also, I feel pretty comfortable saying that Microsoft, shockingly, is not playing fair and is bundling their products in a way that I would imagine might get them in trouble in the next five or six years, where a product like Teams is effectively free as part of Office 365. Free and from a vendor that they know they can trust and with salespeople who have been working with them for 10 or 15 years, that’s a tough thing to compete against.

Josh Stein: Going back to the, you really need to make it … You need to give them a compelling reason to take that risk on you, because if I was an IT buyer, that is the safe choice, is to go with Microsoft Teams, even if it’s not what my users maybe would prefer. But also, here, the users are reading TechCrunch and they’re more aware of the latest technologies. Your typical Fortune 500 employee is perfectly fine using Microsoft Teams.

Erik Torenberg: So what’s going to determine, just because of that example, whether or not Slack can rise above? How do you expect or predict that competition to play out?

Josh Stein: I think it’s going to be a couple things. I think the first is they’re going to have to develop their own go-to-market tactics that compete with that. For example, last fiscal year, Box did about $500 million in revenue, so we’re getting to real scale now. Box, I think, has a much more forward leaning story than Microsoft on things like AI, for example, and machine learning. We have an offering called Box Skills, which is a framework where you can plug in machine learning models, and if all of your content is in Box, as new machine learning models become available, it’s like your data is future-proof, if you will, because you have that easy framework. That’s the kind of thing that gives a lever for a buyer to say, “Okay, I’m going to make that bet on Box because they’re more forward leaning in the vision.”

Josh Stein: While the bundling can be very powerful, the knock on it is I think you also are seeing some products that they’re not investing in as much. I think the secret for a Slack and a Box is actually going to be a combination of developing your own go-to-market tactics and strategies that maybe get you on a par with those companies, and then product is really where they’re going to win and out-execute. I would love to see more of those companies coming together, like Slack and Microsoft and Zendesk, to battle some of those incumbents, because I do think, also, all three of those companies would be thought of as big companies in the Valley and very small companies, I think, in the broader landscape.

Brianne Kimmel: It’s an interesting point when you talk about more of the partnership component to SaaS, and I think that’s something that startups feel this especially. Once you start to move up market or you start to go after large enterprise buyers, you have to understand their existing workflows. Typically with that comes a lot of integrations and connector tools to ensure your customers have a more holistic view of their customers. 

One of the things you have to think about is, how do we prioritize partner integrations? But I think what’s really interesting, specifically with something like Microsoft Teams, I actually worked on the launch for Slack and Microsoft Teams. A lot of these partner integrations we’ve brought in house, because it ends up being a core value prop for the business.

If you want to go to an enterprise customer, they expect you to have a Salesforce integration, they expect you to connect with all of these tools that they’re using already, and I think the Slack and Teams example is really good, where if you think of a product like Zendesk, it’s very much focused on a very core buyer, which is a customer support buyer. You’re not going to necessarily get a marketing person, an IT person, to log in and look at Zendesk all the time.

 But what you can do is you can pass any tickets that make sense for them, pass it to them using Slack or using a communications tool that they’re using on a daily basis.

It becomes a more broad, internal conversation when you can say, here’s a little piece of our product, but we don’t expect you to log in on a daily basis.

Microsoft Teams integrates with Asana, Intercom and dozens of partners.

Josh Stein: I totally agree with all of that. I think I would also maybe, building on that a little bit, I think one of the strengths of founders and entrepreneurs is they sometimes have a different metaphor for what something should be.

For example, CRM, it’s traditionally accounts, opportunities, etc. It’s a classic data structure that then drives the product. I think you’re seeing more innovative companies like Affinity, for example, coming up with taking that metaphor and turning it a little upside down on its head and making it a more organic and flexible concept.

Josh Stein: In communications, I would argue Slack did that in terms of thinking about how we reinvent that.

One of my more recent investments is in a company called Front, which was started by Mathilde Collin and her cofounder Laurent.

I think they had a different vision for what should the customer interaction experience be. So, less being based on a ticketing system as a metaphor and more based on, how do you think about a holistic conversation with this customer that’s both multi-channel but also a single pane of glass in terms of my interaction with you as a customer, as opposed to just, this is your ticket, I’m going to resolve this ticket. I’m trying to think of it as sort of a queue. It’s more of a, how does a group of people at a vendor come together to service a customer?

Josh Stein: I think it’s not just a more mobile first version or an easier to use, it’s actually a different metaphor for the interaction. Those are where I think it’s really exciting, because it creates white space, if you will. You’re still competing at some level with an existing solution, but you really have a differentiated advantage there, because it’s just a different thing.

Front – a shared inbox for teams

Erik Torenberg: Totally. Mathilde’s obviously an awesome and inspiring founder and person. I’m curious, did they have, when they were starting this company, a Babe Ruth moment where they were like, “Five years from now, the world is going to look like this,” and some people saw it, some people didn’t, or was it more evolutionary? What’s your perspective on that?

Josh Stein: That is a great question. When I invested, they were already really off to the races. She has done a remarkable job at building that company in an extremely capital efficient way as well, so I co-led their series B-

Erik Torenberg: Which was very competitive, because right now it seems obvious. Everyone’s trying to get into that round, and I guess I just wonder, why didn’t people see it?

Josh Stein: Yeah. I think it’s an audacious thing that they were trying to do. I think when you have that new metaphor, it’s interesting, a lot of people will disagree with it early on if there’s less validation. I give the people who backed here at a seed level huge props for that. Mamoon Hamid, who led the series A I think, is someone who’s now … Mamoon and I worked together on Box very closely. I did the A, which you now call a seed, he did the next round. He did both Slack and Front. I’d say that’s a remarkable track record of spotting these new metaphors and remarkable founders early.

Josh Stein: But I don’t know the details as much with her in that. I can tell you that one of the things that we look for in maybe a little more growth, sort of, investment where we’re looking for the momentum is the dog is eating the dog food. With the case of Front, it was just absolutely clear that they were.

Erik Torenberg: How do you think about, Front, obviously, originally a French company, moved here. How do you think about building and investing in companies outside of Silicon Valley? Just how people approach it, how you think they should approach it? What are your thoughts there?

Josh Stein: It’s become very fashionable to say Silicon Valley’s not the place anymore. I have my Silicon Valley tattoo, I guess. Maybe it’s because I grew up here, but I still think it’s the best place to build companies. We’re all familiar with the challenges. Talent is very expensive, people move around a lot, etc., but I also think there’s more of the ingredients here than anywhere else. I’m constantly amazed at the amount of creativity that comes out of this place.

Josh Stein: With that said, I think having the ability to operate in multiple regions, which traditionally was very hard, but has gotten better thanks to some of these tools like Slack and Front and Box, is critical.

In the case of Mathilde, she’s French, so she has a French team.

Tiago at Talkdesk is Portuguese. We have half the company in Portugal. I think there’s this magical thing where if the founder is themselves from a different community and has those ties and really understands the culture, it can work very well.

Even if you don’t, I would say, once you get to the scale of maybe 150 or 200 FTEs, I would strongly encourage any of our founders to be looking at secondary locations, especially for things like sales, outbound sales, customer service. Development’s a little harder to pull off, but at some scale people do it. But I don’t know, what do you think?

Brianne Kimmel: I’m in a number of French and Israeli companies and I think that there are really strong SaaS specific ecosystems outside of the Bay Area. I think it’s interesting because I think when you look at enterprise software as a category, there’s been a number of really great companies that have been built elsewhere.

Atlassian’s a great example of that, where now there’s some really strong technical talent in Australia and in certain parts of APAC, and they’re all Atlassian alumni, so I’m very bullish on that region specifically when it comes to SaaS.

There’s a lot happening in Paris right now. There’s Station F, which is a huge incubator and accelerator. I’ve seen a lot of really interesting companies come out of Partech and eFounders. Front is actually an eFounders company.

I think where a lot of companies potentially come up against some challenges is once you want a true VP of sales or when you’re starting to scale certain organizations where it’s just a lot easier to potentially find seasoned professionals in the Bay Area.

I think it depends on how technical your product is, as well. I think if AI is going to be a core function of your business, then by default you’ll find some really great AI engineers in Silicon Valley.

Or, if there’s a hardware component, I think one of the interesting things that I’m seeing a lot specifically with the large frontier tech enterprise companies where it’s autonomous vehicles or drones or some of the next-gen enterprise, those are companies where you need to raise a lot of capital up front, and if you need to raise a lot of capital up front, this is the best place to do it.

Josh Stein: Oh, by far. The amount of capital here, I think, dwarfs any of the other markets. It’s a power law kind of a thing. I think the other thing that is a benefit of having a presence for companies a little bit sooner outside of here is, you alluded to this earlier, it can be an echo chamber here. One of the things we screen for is some of the companies that are seeing a lot of growth are primarily selling to other startups in the Bay Area, which I would argue is ultimately probably an atypical customer and one that could also be very market dependent if we have some sort of a downturn.

Josh Stein: I think making sure that your product also plays in other regions is a very good thing, and I would encourage founders are not so busy they don’t take the time to travel enough to other parts of the country and really understand what their customers are thinking.

I’ll give you an example of someone who I think just crushes it on this. Edith Harbaugh at LaunchDarkly is an amazing CEO that I’ve been lucky enough to back. She is on a plane constantly, flying, talking to customers, giving the pitch in different regions. I think it’s made her much more facile and intuitive about the needs of customers across a broader segment, not just the needs of other startups, if that makes sense.

Josh Stein: She’s selling software that effectively make companies more agile in how they develop and deploy software, so that’s a natural thing to sell to other companies here, but I think, going back to the point of to be a really big company, $1 billion revenue company, you can’t just sell to software companies and startups in Silicon Valley. This is a criticism of some of the companies that come out of incubators is that some of that early traction, it’s very heavily concentrated within their own network or incubator. So, making sure that … There’s nothing wrong with that, per se. It’s still traction. But making sure that the message plays more broadly, if you will.

Erik Torenberg: I’m curious. How do you break up the world? SaaS, obviously, big enterprise software, big topic. If you think about explaining to your partners or other folk, the subdomains within you could pick companies. How do you break up the world a little bit? If you were to market map where companies fit in that you take a look at?

Josh Stein: We do the typical market mapping. Obviously, there’s high level buckets, like there’s applications, there’s infrastructure. Those are relatively different. Within applications, you have different sectors, some of which we think of being much more, let’s say, heavily mined at this point. I’ll pick on one. Martech, I think, marketing tech is one that’s … There’s just so many companies going after such narrower slices. I’m sure you can build a company there, but it’s just harder, I think.

I think one of the things that impressed me the most when we saw Tiago was that he had found, I think, effectively one of the last major horizontal white spaces, where there just hadn’t been a lot of innovation, even though that’s a very large category of application software. I think on the infrastructure side, we try to listen to people who, frankly, know more about it than we do, so giving a plug for someone who I really respect, Jesse Robbins, who is the founder of Chef, is just an incredibly well thought of person in the DevOps space.

Josh Stein: Jesse will sometimes pull me aside and say, “Hey, you really need to be paying attention to what’s going on here,” and I’ve just learned to listen to him. So, LaunchDarkly, for example, hit my radar when Jesse was like, “First of all, Edith’s amazing, but also, feature flagging is going to be a thing.” We’re a little more reactive in that sense, that we’re looking for the founders to educate us on it.

Josh Stein: I think the problem with market mapping, too, specifically, is I was talking to some of our up and coming investors. There’s going to be six competitors, especially if you’re being super official about it, for every idea that you see. I think especially as an early stage VC, it’s actually a mistake to focus too much on competition too early. I tend to focus much more on, do I think this is a space that has legs? And do I really like the person? I tend to focus very heavily on the founder or the two or three founders that are involved.

Josh Stein: I think if you have those, that’s really enough at the early stage to take a bet. When I did Box back in 2006, that was coming off the heels of X-Drive and IDrive and all these things that had sort of failed. I think it would be a mistake to say, “Oh, well, that’s been tried and it failed,” or, “There’s a dominant competitor that we can’t go after.” I think at the growth stage, that’s much more relevant. I think that there is a premium, even more now than 10 years ago, for being number one in a space. I think as a growth investor you have to be much more aware of that. I’m curious, you go even earlier than we do. How much do you spend time on thinking about the competition versus looking at the individual?

Brianne Kimmel: I think to start, I think going back to what we were talking about earlier with 20-year-old founders who haven’t worked in enterprise, I think these are the types of founders Erik and I are seeing at the early stage. Oftentimes, the way that they are thinking about their product, they’re actually not putting themselves in a very specific category or bucket.

I think if you look at Front as an example, maybe if you had been an investor around the block for a while, you would put it as a subcategory under a Zendesk or a traditional customer support software. But if you talked to a founder like Mathilde, her vision is going to be very different, and actually, the features and the way that she’s thinking about the product is actually going to be much different than, say, these existing tools that people are using already. I think category creation can be especially powerful for b2b startups.    

Where enterprise is different from consumer is the workflows piece, your customer will come with very specific requirements in terms of features and professional services. 

Josh Stein: To that end, most of my enterprise companies that I’ve invested in have also had young founders. Scale, 20 years old. VoiceOps, 25. Lattice, I think he was 26, 27 when Jack started it. What we haven’t talked about is vertical, like pharma or healthcare or real estate or fintech. Have you guys made those types of investments, or how do you view those?

Brianne Kimmel: I’ve been spending more time on horizontal software plays and what will be the hero use cases. I’ll use Airtable as an example, because I’ve known the Airtable team for a while and I think one of the interesting things about them is that when you come out with a tool that’s basically, “we can do anything for anyone”, it’s actually really difficult to go to market.

I think what’s been really great to watch as far as understanding how they think about their go-to-market is they’ve actually developed a series of use cases which are really compelling and actually help the product grow virally.

Recently, they’ve really found a nice sweet spot in org charts. If you think about org charts, you’re like, well, is that really, what does that mean in terms of market size? Is there a need for a product that only builds org charts?

Airtable’s Employee Directory template

Because this is just one category as dozens of other ones that you can do, this use case is actually really interesting because it’s a unique way of starting top down. If you think about org chart planning, that’s starting at very much a director level or above. It’s also an easy way for you to add new users to the product.

Brianne Kimmel: As your org chart grows and as you’re making changes, you start adding more people to this Airtable and it becomes, really, a cool internal use case which is basically director level and above as far as who you’re selling to, but then you can start to really tackle team by team who are you adding to this chart. It’s kind of a simple use case for one template, but it’s an easy way to articulate, this is a really broad product and how do we get more people using it.

Josh Stein: I think that’s a great example, because if it was just an org chart product, I think it would be a much more limited opportunity, but I think it’s obviously a much broader product than that, but you have a use case that still pulls it in. If you have a broad product and it’s not really great at any one use case that gets someone’s attention, it’s not going to make that leap. I think a lot of the use cases for Box early on were actually relatively simple, like people wanting to replace an FTP server, but then as they start using the product, they realize, oh, it can do this, and, oh, it can do this.

Josh Stein: It gives you that initial hook, and if org charts is the kind of thing that particularly can be, let’s say, articulated easily by a rep doing a call or following up on a lead, that makes it, I think, extra valuable. One thing that we have spent a lot of time looking for in our companies is also an accumulating advantage or a compounding advantage that builds. I think additional features is one of those. In vertical specifically, we’ve done some vertical investing, specifically mostly in healthcare. I think VIVO would be probably a great example. We did not do VIVO. We did Athena Health, which is a similar one, but within those verticals, I think it can be easier to have that compounding advantage.

Josh Stein: For Athena, for example, their core product was helping doctors get reimbursement from insurance faster. They had a rules engine. This is pre-ML, where insurance companies, part of their business, basically, is to reject claims and drag their heels. They would, every time they had a claim rejected, they would code a new rule about how to make sure that didn’t happen again. When a doctor would join the platform, it would go from like 40% first time acceptance of the claim rate up to like 90 very quickly, and then the DSO, the day’s sales outstanding, effectively the receivables for the doctor, would go from 90 days to 30 days over a three month period.

Josh Stein: That was a compounding advantage that was more possible because they were in a vertical. That would be harder to generalize across, I think, a horizontal category. One advantage of verticals is that you can have, I think you can understand the customer more deeply and it might be easier to have market dominance in a vertical. But you’ve really got to make sure the vertical’s big enough to go after.

I think what I have not had any success with as an investor, although I’ve tried, is backing a company that’s in one vertical with the expectation that they will bridge to another vertical later. I think I’ve seen that happen never point never, and I think part of it is when you build a company from the beginning to focus on a vertical, the culture is so ingrained in that. The people you’re hiring know that market so well that it’s very, very difficult to pot that to a new thing.

It’s much easier to start with a horizontal product and then have vertical teams. In fact, most of the broad … Take a Salesforce, for example. CRM’s a broad solution. They certainly have account teams that are very skilled in different verticals, but the other way around never works in my experience. 

Examples of Salesforce vertical solutions: Healthcare, Nonprofit  and more.

Erik Torenberg: Talk more about this concept of compounding … You said compounding advantage? Is that what you said?

Josh Stein: Yeah, it’s like accumulating advantage or compounding advantage.

Erik Torenberg: Unpack that a bit more. Where do people have misconceptions? They think they have compounding advantage but don’t in fact have it? Just unpack that a little bit more.

Josh Stein: I think it can come from a lot of places. It can come simply from simple scale economy. Twilio, when Jeff came and talked to us, first of all, he had such a clear vision about where this builder economy was going and how do you enable the makers to make things faster. But the thing that really got us over the hump there was he also had a very articulate case for how he would … Even it’s a market where you think it would be commoditized over time, if you’re the largest player, you will be the commoditized. You will be the person pushing the cost curve down and forcing everyone else to play catch up to you.

Josh Stein: Andy Jassy at AWS has probably done this better than anybody else, where AWS is now generating a huge chunk of Amazon’s economic value, profits, cashflow, etc. That should be a commodity business. On paper, that is a business where you’d think that would be everyone can do it and it goes to zero. And the accumulating advantage of something like Twilio is not just that as the largest purchaser you have economies of scale in the buying process, but also developers become used to using you.

Josh Stein: If I know how to build on AWS, could I go and learn how to do it on GCP or on Azure? Sure, but unless there’s some compelling reason, like it’s a lot cheaper or a lot easier, why would I do that? If you’re AWS or Twilio, you’re locking down that cost curve, and you already have the developers locked in there, I think that’s an incredibly compounding advantage. The advantage gets stronger over time, not weaker or static, if that makes sense. Those are the things that we’re really looking for.

Josh Stein: It could be a data advantage. Actually, it’s interesting. When we backed Box, I thought the data advantage would be something more persistent across customers, where we could do analytics across different customers. That actually, I would argue, didn’t really pan out as much, but what Brianne was mentioning about, you start with one use case and bridge to the others, that has been very true. The compounding advantage, once your content’s already in Box, IT has already blessed Box and said, “This is okay, this is HIPAA compliant, this has passed our red team audit” kind of thing, if you’re now building an application, why wouldn’t you build it on top of Box rather than go bang your head against your IT and your security team to get permission to do it somewhere else?

Josh Stein: Those are the things that we look for, but at the early stage, a lot of it’s conceptual. You just have to … What I’m looking for is, does their founder articulate what could be? Are they thinking about that stuff?

Brianne Kimmel: I think one interesting thing in B2B is how to think about consumer trends and how they apply to B2B. I recently invested in a video API company called Voxeet.

With Voxeet, you can embed live video, podcasts and interactive media into any mobile app or web application.

What’s really interesting is, going back to the healthcare example, I thought of this, where in healthcare we’re seeing a shift towards telemedicine. Whether you’re One Medical or whether you’re any of these existing healthcare providers, there is a need for the ability to basically talk to your doctor from home. What that means from a B2B standpoint if you’re developing, say, a video API, then having that HIPAA compliance is really important. That’s going to unlock new opportunities.

Brianne Kimmel: I think when we were talking earlier about the Microsoft Teams example, if you want to go after the enterprise, there’s always these certain set of features where you may need to invest a little bit of time to become HIPAA compliant, but that’s going to unlock an entire new vertical for you. The question is usually for the founder, at what point do you want to do that? And oftentimes that is heavily dependent on what does that broader healthcare landscape look like?

Erik Torenberg: One question I have for you guys is how you think about white space in general. There are couple ways to ask this. One is if you were starting a company today in the enterprise space and you weren’t limited to your skill sets, as strong as they may be, if you had any skill set you wanted, where would you say, “Oh, here is a really good opportunity, I just want to see a really talented entrepreneur take this opportunity”? When really talented entrepreneurs come to you and say, “Hey, what should I work on?” Where do you tend to … I know some of it is reactive, you want them to educate you, but where are some opportunities you noticed? Brianne, do you want to start?

Brianne Kimmel: Sure, I’m seeing a few key trends that will impact the future of work in the next five to ten years. 

We need more efficient ways to build software. 

By 2020, there will be 1.4M more software dev jobs than applicants who can fill them. We need to solve the technical talent deficit by reducing the barrier to become a software engineer and empowering non-technicals with codeless applications.

Today, companies like Repl.it and Roblox are changing the way kids learn to code and build applications through collaborative, multi-player features. I think early childhood education will continue to look more and more like a video game.

We’ll see new classes of education, Lambda School and Whitehat are two companies rethinking technical education and modern apprenticeship  with viable alternatives to traditional college.

We’ve talked a lot about business applications on the episode today, but there’s still a lot to unpack in terms of white space.

I think anything that works in consumer will ultimately make its way to the workplace. As work becomes more and more decentralized, I think we’ll see intelligent collaboration tools and social networks to connect remote employees.

Josh Stein: I have a three-part hypothesis for where I think broadly opportunities are going to be over the next five or 10 years.

The first is, I think, speed matters more and more in life and in business. Companies want to execute in a more agile fashion. Things that remove friction, whether that’s AWS or Twilio or LaunchDarkly or CircleCI or Chef, things that allow people who are building products or building things to serve customers to go faster, I think that’s going to be a winning strategy. It may seem like we have low friction now. It felt like we had low friction in ’99. We didn’t walk around going, “Oh my God, we’re living in the dark ages.” I think we’re going to see things that make it even faster over time.

I think we’re going to live in a world and businesses are going to operate in a world that is increasingly driven by data and by people who understand data at massive scale. We have a lot of bets around this kind of hypothesis, that data science is going to be a thing. I think anything that relates to how companies can store data, process data, ingest it, enable people to do with data, I’d be spending a lot of time there.

I think the third step of that is, I actually think algorithms working on data is going to be even bigger than people working with data. It’s almost trite at this point to be like machine learning and AI’s going to be a big thing, but it really, really is. I think it may be under-hyped, especially outside the Valley, not over-hyped or maybe misunderstood as being more like the Skynet, Her, sort of general AI versus maybe just algorithms and models that are helping us make better predictive decisions or being more proactive as opposed to reactive with data.

I have a 13-year-old and an 11-year-old, and I plan to encourage them to study that aspect of computer science, because I think that’s the way the world is going to run. I think we’re going to see huge, positive changes in the world where we effectively liberate people from really tasks that have a lot of drudgery to them. I think it’s going to be a huge net positive for society. I also find it very meaningful, not just in that I think it’s going to be financially successful, but I actually think it’s going to be one of the things that takes us as a world and as a society to the next level is harnessing data and machines effectively to make our lives better.

We’ve put in a number of bets in autonomous driving, which you mentioned earlier. I think that’s going to be a huge productivity enhancer and quality of life enhancer for people, just getting that commute time back. I think it’s going to make our cities more livable. I think you’re going to avoid huge numbers of accidents and deaths that happen. So, not to get too far out there, but I would say to people, focus on things that let people go faster, focus on things around data, and focus on things that have ML and AI attached to them.

Erik Torenberg: Where within the stack of autonomous vehicles have you invested?

Josh Stein: We went fully nutty and went for the full stack approach. We were one of the early investors in Tesla, which obviously is a leader in the space. We’ve looked at just about everything. The big bet that we’ve made is a company called Zoox, which is full stack, which means soup to nuts. They are doing everything from the body of the car all the way up through the software stack. Then even the consumer facing service that runs on top of that, rather than partnering with an Uber or a Lyft, they’re actually building that whole service as well. It’s an incredibly audacious undertaking. It probably has the highest concentration of IQ of any of our companies that I’ve seen, and I think they’re going to do amazing stuff with it, but in that specific case …

Josh Stein: In the frontier tech space, which I do less personally but DFJ does a lot of, we’ve done better backing entrepreneurs that are going for the full stack, change it all approach rather than incremental approaches. We’ve been lucky enough to back Elon in his last three companies, and I would say very much with Tesla, but really much with SpaceX. That was the guiding principle, which is, I’m going to reinvent the entire thing, not just retrofit a rocket. I’m going to rethink the entire design. Actually, I think he brought a lot of the principles of software engineering in terms of reusability and modularity and stuff into it.

Brianne Kimmel: I think it’s very interesting, though, to think about opportunities if you’re more of a business-minded founder, as well, or if you are a VP of sales or someone that’s really strong on business development. I think what’s interesting about a lot of these frontier tech spaces is autonomous vehicles, for example, vertical takeoff and landing, looking at even AI and machine learning, I think historically, these have been very much academic projects. They’ve come out of DARPA, they’ve been MIT projects. They’ve always been very much part of a university. I think over the past few years, we’re starting to see there are actually real world applications.

Brianne Kimmel: I talk to a lot of founders who are working on autonomous trucking or autonomous vehicles, and they’re actually looking for more support on the business side of things. Like, how do we actually package this up? How do we think about applying consumer research and actually taking this to market? I think a good example of that is a company called Voyage. Voyage is basically tackling autonomous driving starting with retirement communities. So, looking at The Villages in Florida, which is basically the largest population of retirees in America. How do you introduce something like autonomous vehicles to this generation of individuals who are potentially less tech savvy, or in many ways, just opposed to the idea of self-driving cars?

Brianne Kimmel: That presents a really unique business challenge where it’s like, we need to build a relationship with these community members. In parallel, we’re also working on some really technical problems over time, and you have these two worlds that are being married up over time, and that’s where a business-minded founder or someone who’s really strong on the go-to-market can help bridge the gap between, here are the end users who are maybe afraid to get an autonomous vehicle, and here is this really hyper technical team who is really comfortable doing the research, but this is their first time taking something crazy and futuristic to market.

Erik Torenberg: Going back to your thoughts on compounding advantage, has there been a time where you invested in a company that you thought had a certain compounding advantage and it turned out that it didn’t? Or a company perhaps you haven’t invested in but you thought they might have or other people thought they might have? When is it deceiving?

Josh Stein: Yeah. I have to think about a good example of what I mean. It often leads to a pivot in the model. When I invested in Box, it was targeted at consumers. We thought that there would be much more around consumers sharing with each other. For example, I remember talking with Aaron. It was a four-person company at the time. “Hey, it’ll be great because if people are uploading the same song or the same video, we’re only going to have to store it once.” In our database, that’s going to be space efficient, back when you actually cared about the cost of storage. As we pivoted the business to enterprise, that just became sort of irrelevant.

Josh Stein: I’ve seen in other companies where I’ve been on the wrong side of that where one of our competitors has found the compounding advantage, and then seeing how hard it is to compete with that. I would say if you’ve been competing with Salesforce over the last 10 or 15 years, it hasn’t been a ton of fun, because they’ve done a really, really good job. One thing with Salesforce now is certainly around here, most people who are in sales have used Salesforce and they’re comfortable with it. The fact that people already know your UI is a compounding advantage. What a pain to have to, in addition to all the stuff I’m trying to do to grow the business, you want me to learn a new system when there’s a perfectly good one right there that we could just buy? That’s a compounding advantage.

Erik Torenberg: So, sort of the opposite of the white space question. What are the spaces that really a talented person who is also your friend came to you and said, “I’m building a company in this space or this type of product,” you would be like, “Don’t do that”? Or, “It’s going to be hard.” You mentioned marketing tech earlier. What are other spaces and why where you say, “You know what? It can be done, but it’s really hard, overdone, crowded”?

Josh Stein: I think marketing tech, it’s like nature abhors a vacuum. It also abhors profits in adtech as near as I can tell other than Google and Facebook. That’s a space that I think is oversaturated, and part of it is there’s a lot of people in the Valley that have used those systems and platforms as an end user, and so they feel like it’s comfortable, it’s doing what you know. I don’t think enough people put in the time to really think about beyond their own experience set, if that makes sense.

Josh Stein: One of the things that I don’t think Aaron gets enough credit for at Box is, we were a year and a half, two years in and the business was actually going pretty well on the consumer side, but we started having a series of conversations that made it pretty clear that the enterprise side is where it was going to be. I would imagine that was pretty scary for him as a 22-year-old who had hired a 20-person team that was all jazzed about consumer. But I described it as, he burned the boats. He went all in on enterprise. He’s one of the best and most prolific readers I’ve ever met. He just made himself a student of the enterprise over the next three or four years. Now he’s thought of, I think, as one of the real thought leaders in the space, and he’s a sought after person of Fortune 500 CIOs to get his take on where the industry’s going.

Josh Stein: He did that by force of will. He didn’t have a 20 year career in enterprise IT. He was both open minded enough to say that, “Hey, maybe that’s where the white space is,” and then driven enough to go after it and do it. I believe very firmly, by the way, that anyone can learn anything given, actually, a remarkably short amount of time. I think if your average founder took two or three months and said, “I’m going to get super smart on the pharmaceutical industry,” you could absolutely do it in two or three months. Certainly 90% of the way there. But people get ingrained in their patterns and their comfort zones really quickly.

Erik Torenberg: For people who are listening to this and saying, “Oh, I actually do want to spend two or three months and get smart on,” do you have any preferred methods of learning? Is it just reading, talking to people?

Josh Stein: Reading, podcasts, books on tape. The biggest piece of advice I would give people is, shut off all the things that are just time sucks. Netflix, TV, YouTube, all those things are just … They’re crutches, they’re time wasters. I’m as guilty as anybody when I’ve had a long week or a long day and I just want to space out in front of Netflix, but afterwards, you feel almost empty, like I didn’t really do anything. I would contrast that to I listened to a great podcast or book on tape or read a great book and I’m always like, God, I just got four good ideas. You just have to force yourself to develop that skill.

Josh Stein: Naval Ravikant has some of the best thinking on this space. I used to be the guy that once I started a book I had to force myself to finish it and he totally disabused me of that notion. I think he has some good hacks on how you do it more effectively, but I guess it’s just making sure that you’re not getting … People want to typecast you as, “Oh, you’re a marketing person,” or, “You’ve a salesperson,” or, “You’re a pharma person” or whatever it is. I think it’s nice to reposition yourself once in a while to break that.

Erik Torenberg: How have you repositioned yourself?

Josh Stein: That’s the thing I love, actually, about venture, which is it sort of forces me to reposition myself. As opposed to when I was in product or sales, I was trying to move the ball forward a couple of yards every day. It was a long, sustained effort. But when I was running my company, I was thinking about my company and my industry 100% of the time. Now, I have a portfolio of companies that I work with, plus I have people coming in to tell me about their ideas all the time. I get to be like a tourist of different verticals and different ideas, and then if I find it sufficiently interesting I get to really dive in deep. I love that cognitive diversity that it gives me. I think it’s actually probably the most fulfilling part of the job.

Erik Torenberg: Brianne, perhaps, could you describe one of our companies, Omneky, How you’d describe it, and then I’d be curious to get Josh’s immediate feedback.

Brianne Kimmel: Yeah, of course. 

Omneky is an AI powered analytics platform for enterprise creative teams founded by two Harvard Computer Science graduates.

With Omneky, enterprise creative teams can keep track of what design and messaging features drive KPIs for each target audience, and get predictive scores for ads and landing pages before launching them on live audiences. Omneky is running trials with Molekule, Curology and Burrow and others where it has shown to increase return on ad spend 8x

CEO Hikari Senju built Omneky to help creative teams generate personalized content using AI, with the end goal of creating an AI that can generate personalized experiences for everyone with minimal human input.

CTO Julian Salazar was part of the founding team of Amazon Transcribe where he launched enterprise AI products to Netflix, Intuit, Amazon AWS and more.

Erik Torenberg: How does that land on you in terms of you heard the idea for the first time, how do you evaluate what needs to be true for that idea, that company to be interesting to you?

Josh Stein: It ticks a lot of the boxes in the hypothesis I articulated earlier. I think mass personalization is related to the idea of agility. It’s sort of, how do you move more quickly? Optimizely’s a good example, LaunchDarkly with feature flagging is very much about this. I liked that it’s leveraging data, and so you’re having a feedback loop about if I show a user this personalized page, do I get a better result than if I show them the generic page? Then you can presumably iterate on that to get better and better and to find the optimal outcome for each person.

Josh Stein: I also think it’s the kind of thing that is what humans would like to do but is not feasible for humans to do at scale, but it’s a perfect thing for a machine learning algorithm to do, to iterate that in. I think the thing that I like about that company just having heard the 30-second pitch is, you should be able to show results very quickly. I would imagine you could demonstrate ROI quite quickly. Then it would be about understanding what would be the potential downsides for a developer who’s thinking about deploying that. Does it introduce a lot of latency? If you’re going to double the page load time, that’s probably going to be a non-starter. If it’s going to create security issues, that’s going to be kind of challenging.

Josh Stein: But I think high level, that sounds really interesting. The other potential thing I’d maybe want to drill into a little bit is, again, not going from … I could easily imagine that company going for $5 or $10 million of ARR, but if you talk about getting to hundreds of millions of revenue, you usually … To get a seven figure plus deal, you usually have to be able to attack an existing line item of cost, so I’d want to understand, what is the … When you’re not just selling this is something else you should have but this is something that allows you to retire this other bit of spend, what is that bit of spend that you’re retiring?

Josh Stein: It might be marketing head count or product head count, or it might be a top line story of, this is going to drive more conversions, so therefore I can spend less on my original because I’m getting the same amount of revenue from those. But really understanding that story, because I’ve yet to see a green field, $5 million software deal, for example. You have to be able to go attack something. It sounds really interesting.

Erik Torenberg: Maybe as a closing segment, you’ve described yourself as a SaaS nerd, Josh, so I want to identify some other SaaS nerds and then I want to identify where, perhaps, if you do have a slight difference of opinion with them on something broad related to SaaS? And you probably agree with a lot of them on different topics-

Josh Stein: Hopefully they’re not listening.

Erik Torenberg: Brianne, feel free to jump in if you have anything you want to mention, as well. One is Tomasz at Redpoint. Where do you see the world differently than him?

Josh Stein: Well, I’ll pick on him just a little bit. First of all, I think he’s a very smart guy. I love his focus on data. The amount of output that he generates is incredible. He has a particularly favorite chart that he likes to plot companies on years since founding, which I think is a completely useless and vanity metric, and I’ve told him so many times. I think it’s much more relevant to look at companies from $1 to $10 million, $10 to $50 million, those kinds of metrics, because there’s monkeying around with the founding year a lot in those things, and I think a lot of companies also wander in the wilderness a little bit as they find their way.

Erik Torenberg: In what context does he use that or how would he respond?

Josh Stein: I’ll give you an example. A lot of the marketing on Slack would say Slack was founded in whatever year it was. That’s complete nonsense. Slack was a pivot from Tiny Speck, which was a game company. Why do you get to pick your founding date as being some arbitrary date that you launched your product? It’s like holding your kid back in kindergarten. I think people who promote those stats, like, oh, it’s the fastest company to $100 million in ARR. Focusing on the fastest to me is … If you told me it’s the fastest company from $1 to $100, that I think is interesting. If it’s from arbitrary start date to $100, I don’t think it’s relevant because who cares if it was three founders in a garage for the first two years figuring it out? Should they be forever dinged for those two years? It’s just nonsensical to me. That’s a nitpicky one.

Josh Stein: I think the best source of broad content in SaaS is Jason Lemkin. I think Jason’s amazing. I think what he’s done on Quora is a gift to the community. I don’t agree with all the things he says, but I think Jason’s extremely good, especially on go-to-market. My observation would be most founders, not all, but most, are stronger in product than go-to-market. I wish his content had been around when I was starting out, because that, I think, is really remarkable, particularly the stuff he’s put out around hiring salespeople and managing salespeople and the mistakes people make. “Oh, well, I’ll just hire a sales VP and then they’ll sell it,” that kind of stuff.

If we have time at the end, there’s a whole bunch of little tactical things that he suggests that I think are right, and then I also have my own set that I try to impart to people.

Erik Torenberg: Yeah, this is the time at the end.

Josh Stein: I’ll give you an example. One thing I’m seeing recently at some of our companies, our companies are using things like Chorus and Gong to monitor their-

Erik Torenberg: And VoiceOps.

Josh Stein: And VoiceOps, sorry. I’m seeing that at the board level where they’re doing analysis on the text in those calls to say, “This feature is being mentioned on 14% of sales calls, and this keyword is being mentioned on 28% of calls,” and it’s actually driving product road map. It’s one of the most effective ways I’ve seen for rationalizing investment and also resolving conflict.

Josh Stein: You mentioned the engineering team sometimes wants to do what the engineering wants to do, but if you can go to the head of engineering or even just an engineer and say, “Look, 42% of sales calls are mentioning HIPAA compliance and we don’t have it yet,” that’s a pretty compelling argument if you all want the company to grow. As opposed to an engineer thinking, oh, this is just some sales guy who’s not doing his job and he doesn’t know how to sell the product we have. That’s one great little hack.

Josh Stein: I think more and more of our companies are using analytics internally to solve for keeping everyone … Like InsightSquared, for example, it’s a portfolio company, so it’s a bit of a plug for them, but I think you’d been crazy not to be using that. It does all the charts that you would ever want between the different departments, on the go-to-market, doing marketing and sales. It’ll make managing your board super easy. That kind of pre-built intelligence and analytics I think is amazing.

Josh Stein: I guess some other just thoughts, the biggest thing that surprises founders as they scale from, let’s say, $5 to $20 million is the time lag that gets involved. You’re used to saying, “Well, I need to do X revenue in a month or in two months, so I’ll start hiring people.” When you’re at like $50 million or $100 million scale, the hiring decisions you’re making now have no impact on the next six months or even 12 months. As the deal sizes get bigger, the time lag on getting people ramped and getting all the way through.

Josh Stein: The flip side of that is a lot of people fail to plan early enough. I’ve seen a lot of companies where growth slows in ways that were entirely predictable six to nine months before just based on their spending. You see this a lot with founders who have been very capital efficient up to a certain point. Tiago still is incredibly capital efficient, but he was so capital efficient that I think one of the things I tried to make him even more aware of was, that’s not always going to be the case. As we get into bigger deal sizes, we’re going to have to make longer term investments earlier. I think he’s in the process now of pivoting the business in that direction.

Josh Stein: Maybe just one last thing, just because I love this. Jason Lemkin very kindly calls this Stein’s Law, but it’s a little hack I developed for the balance sheets. I was always stressed about running out of money when I was a founder. When do you raise money and how much do you spend? What I say to founders now is two things. The first is, as a rough metric, if you have half of your ARR on the balance sheet in cash, net cash, you’ll be comfortable. If you have less than that, you’re going to be scared money. You’re going to be running scared.

Josh Stein: If you’re $20 million in ARR, if you don’t have $10 million on the balance sheet, you’re going to feel like you’re at risk. If you’ve got more than that, you’re going to feel okay. The other thing is as you start ramping, especially if you’re in hyper growth … Box went 10, 25, 55, 125 in three consecutive years, which is insane growth. We burned, as now everyone knows, a lot of money to get there. One of the things that gave us a lot of confidence was Dylan Smith, who’s Aaron’s cofounder, and I came up with this thing that we called the ripcord rule.

More on SaaStr: What makes a great SaaS CEOMy CEO told me to stop selling so much

Josh Stein: The ripcord rule was we always knew that if we simply stopped hiring, so if we just kept expenses where they were, we would converge to cashflow positive on the cash that we had on our balance sheet. Whenever the ripcord rule came into question, we would raise more money, or we would stop spending, one or the other.

Josh Stein: There’s 100 things like that and Jason’s got a whole bunch of them on his blog, but this is stuff that it’s gold if you’re a founder. I wish I knew this stuff ahead of time, and I think it’s one of the great roles that I think investors can do, is give some of that context to entrepreneurs who are often doing it for the first time.

Brianne Kimmel: One thing that’s interesting that Josh and I have talked a lot about is founders who also shy away from paid marketing. I actually don’t view paid marketing as a bad thing, and I think oftentimes when I see a pitch deck and it’s like $0 paid marketing, I kind of almost … It’s not a negative signal but I almost wonder, why don’t we try testing it? It can be very small, incremental tests over time, but I think it’s really helpful to understand, how capital efficient is this founder, and how well do they know their business in terms of, will paid marketing actually work for us? If it does work, how do we do this in a very efficient and safe way, and is this a level we can start to use over time?

Josh Stein: Yeah. Saying that you’ve spent nothing on paid marketing is another way of saying, “I have no idea how paid marketing is going to work for me.” There’s not a single company at scale I can think of that doesn’t have paid marketing.

Erik Torenberg: We have a few minutes. Are there any other things you want to leave the founders with who are eager to build companies in this space?

Josh Stein: One thing I’d say is, I touched on it earlier, but I really believe pretty deeply that the risk has changed. When I was a founder 20 years ago, when companies failed, they just hard failed. Some people would build a product and it would never get customers because the lag was so long in the feedback cycle. If you can get your company to $5 or $10 million of ARR, assuming you’re willing to cut back and live within your means, you can keep that going for a long time, but that’s a trap of its own.

Josh Stein: I think there are going to be a lot of companies at $5, $10, $50 million of revenue, but they’re not really growing that fast, and maybe they’re even profitable or cashflow positive, and people are going to figure out, what do we do with those companies? I thought it was very interesting reading Joel’s post from Buffer, where he embraced that model. He actually bought out his investors. I think we’re going to see more of that, potentially. Although it didn’t seem like it was that great of an outcome for his investors, so there’s a little bit of a disconnect there.

Josh Stein: We’re seeing private equity becoming more aggressive, but private equity’s coming in and paying two, three, four times revenue, maybe six times at the outside. That’s a huge … Try telling a founder doing $20 million in ARR that their business is worth $60 million. They’ve probably raised $50 or $60 million. There’s going to be a lot of companies that I worry get stuck in the middle, and I think my advice to founders would be, really be open eyed about that. If you think that that’s a risk, the temptation is to say, “We’re just going to give it another quarter, give it another two quarters.”

Josh Stein: If you feel like momentum is starting to slow, I would get much more forward leaning about how are we going to think about getting ahead of that issue, because I would think about pursuing an acquisition, for example, much more aggressively than before the bloom comes off the rose.

Erik Torenberg: Is what separates the companies that have that ceiling versus the companies that don’t, is it mostly market? Or is it a competitive landscape, or is it something else? Do you have a good idea of what those ceilings are going to be?

Josh Stein: I think market’s probably the dominant consideration. Some of it, I think, is companies that for whatever reason are unable or unwilling to develop that next go-to-market motion. Maybe the product doesn’t support it, maybe they don’t just frankly have the patience to do it. Dropbox is a company that I think got the highest level of scale without enterprise sales. I was reading their S1. It looks like they got to $500 or $600 million pretty much without a lot of enterprise sales. But if you look at them now at $1 billion, they’re very heavily into enterprise sales. I think Dropbox is really atypical in that sense. I would say that’s probably the best I could think of, and it’s a highly viral, highly horizontal, very easy to understand product, and most products aren’t like that.

Josh Stein: I just think it’s maybe being … I actually think more companies also may, if you are comfortable with the idea of running a company that’s, let’s say, $20 million in top line and netting $4 million a year, nothing wrong with that, but you have to think about that from the, how are you going to build your cap table at the beginning. You don’t want to go raise from venture investors if that’s the case. You want to make sure that your investors are also aligned with you in that. I just think it’s an interesting consequence of, it’s harder to fail, but it’s actually in some ways also harder to succeed.

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Distrust has gone viral! What companies can learn from Fyre Festival & the new sources of trust.

The release of two Fyre Festival documentaries on Netflix and Hulu has sparked a much needed debate on consumer trust and the misaligned incentives between influencers and their followers today.

In my presentation Distrust goes viral, I present an in-depth look at recent events where distrust has been amplified by millions of people in a matter of seconds including:

Why Fyre Festival is a pinnacle moment for influencer culture and late-stage capitalism   

What happens when an ultra-exclusive event backed by the world’s most popular Instagram influencers ends in disaster as thousands of ticket holders, some of which paid up to $250,000 to get last minute tickets, are stranded on a remote island in the Bahamas…

Distrust goes viral. 

This is the first time we’ve seen lawsuits citing “100 Jane Does” — 100 unnamed influencers who promoted and posted about the festival. One lawsuit claimed these influencers acted “with negligent misrepresentation, fraud, breach of contract for failing to ‘provide the festival experience as promised’ and for ‘misrepresentations’ that caused people to purchase tickets.’”

What happens when major corporations like Samsung face distrust on a global scale 

Following multiple instances of exploding devices, we’ll look at the data behind the recall of 2.5 million Samsung Galaxy Note 7 devices.

Distrust goes viral. 

Why United’s “Fly the Friendly Skies” slogan failed to deliver on multiple occasions. 

We’ll explore why celebrities like Seth Rogan and Chrissy Teagan tweeted about the unfair treatment of two young girls who were barred from boarding a United flight and the infamous passenger removal on United flight 3411 where a paying customer was dragged over an airplane.

 

Here we see two situations in less than one month where a company put policies before people.

This is a scary time for companies. Every private conversation can we shared publicly in a matter of seconds. 

Every interaction that we have with our customers is critical and this is the new reality. So what can we do? 

We’ll look at the new sources of trust for consumers today:

  • People trust themselves
  • People trust friends and family
  • People trust people like them

Distrust goes viral was originally presented at Pioneers Tech Conference just after the shocking events that unfolded that Fyre Festival.

Read the transcript with slides below or watch the video.



This summer, all eyes have been on one specific event…

 

 

 

 

 

 

 

 

 

A festival on an island in the Bahamas: an ultra exclusive venue with amazing accommodations and backed by some of the most popular influencers in the world. When you look at this event, it looks pretty incredible. 

As we go through the festival lineup, we see major acts that we would expect to see at Coachella but without the lines or the crowds. VIP packages including airfare and luxury tent accommodations for US$12,000 and last minute sold for up to $250,000 per ticket. 

The best part about Fyre Festival? It was backed by the coolest celebrities and Instagram influencers, you had to be in the know to hear about it. From Kendall Jenner’s post alone, Fyre Festival saw 6 million unique impressions.

Celebrities, influencers and models created a total of 78 million impressions to promote the event. 

Following the social media push led by celebrities and influencers, traditional publications fast follow with earned coverage promoting the ultra-exclusive festival that everyone is talking about.

Let’s go back to the beginning. A remote island, an elite crowd, two unforgettable weekends. What could possibly go wrong, right? Well, let’s look at what really happened.

You’d expect beach-side bungalows in the Bahamas and a great place to stay for those two weekends. Well, what actually happened is we start to see a disaster is about to unfold.

The dining experience. A very important part of a festival experience because you want every moment to be Instagram worthy. So let’s just take a couple minutes and look at these cheese sandwiches. What a joke. 

Finally, we see a price tag for celebrity endorsements.

Jenner was paid $250,000 to promote this event. For Jenner fans, this news is disappointing.

For influencers and celebrities, lesson learned. It’s your job to protect your audience and keep advertisers honest.

The FTC has previously brought cases against Warner Bros.Sony and the fashion brand Lord & Taylor over influencer-centric marketing campaigns, but never against individuals. In the case of Fyre Festival, we see lawsuits citing “100 Jane Does” — 100 unnamed influencers who promoted and posted about the festival.

One lawsuit claimed these influencers acted “with negligent misrepresentation, fraud, breach of contract for failing to ‘provide the festival experience as promised’ and for ‘misrepresentations’ that caused people to purchase tickets.’”

 

One day before the festival, the talent cancels blink-182 pulls out completely. They say, “We’re sorry, this isn’t the type of festival we want to be involved in.” But for someone who has already bought tickets and booked their flights, it’s a little too late. You start to imagine who actually organized this thing and how is this even possible?

Well, we look at the event organizer, Ja Rule.

In his public statement to talk about the festival, he makes two really bold claims.

He says, One: “This is not a scam.” Two: “It’s not my fault.”

So as the co organizer of this event, it’s all hands-off. Sorry, I don’t want to take the blame for this.

Next, we look at the main source of truth. People on the ground.

These are two tweets coming from someone who bought tickets to this festival. She’s tweeting from the plane saying, “Look, I’m stuck on a plane. The government won’t let me in.”

Next one, “I just heard they are emptying our plane and literally rescue people are coming.”

As she’s live tweeting from this event, there are millions of people watching on Twitter and waiting for the full story to unfold. 

Every interaction has the opportunity to go global.

In a matter of seconds, any situation can be amplified by billions of people, but this isn’t the first time that we’ve seen this happen.

Let’s look at the Samsung Galaxy Note 7, it’s a cool product from a trusted company.

Well, 2.5 million phones were recalled after live videos, tweets and photos went viral on social media. 

My personal favorite, you can see here a new name for the Galaxy Note 7: Now our technology explodes. Not ideal right? Now as we zoom out and we look at the data, you can see here, each spike is a new video being posted online.

 

The major spike at the end is one short video coming from a Burger King in South Korea.

Millions of impressions and thousands of people jumping into the conversation.

This is truly a disaster for Samsung.

We have one more example. Trust keeps going viral.

United has invested a lot of time and money to create a “customer-centric brand.” Fly the friendly skies. 

Well, this photo here is pretty graphic, but it’s impossible to ignore. If a company tells you you’re about to fly the friendly skies, and this is your personal experience, you’re going to think twice before flying with them again. The expectation of flying the friendly skies was much different than the actual reality.

 

When we zoom out, here’s where things get really interesting.

Most people don’t know this wasn’t the first time United had this sort of situation.

It was actually the second one in one month. If we zoom out and look at leggings gate, this is a really interesting situation where a company policies come before people.

What happened with leggings gate is a couple of little girls were not able to board a flight with their parents because they were wearing tights, so moral of the story, the next time you try to get on a United flight wearing sweatpants and a T-shirt, I would definitely think twice.

Their policy doesn’t allow for that. As you can see from this situation, big companies put policies ahead of their people, and it’s really frustrating. As we look at the three examples that I’ve shown, a really powerful quote comes to mind.

Trust takes years to build, seconds to break and forever to repair.

“If we take a step back and we think about trust, it is the core component to all relationships. Whether it’s personal or professional, we will not last without trust.

Nothing works without trust, so when we apply this to the recent examples that we talk about, trust takes years to build, it takes seconds to break, and it takes forever to repair, but imagine amplifying that by millions of people.

This is a really scary time for companies. Every private conversation can we shared publicly in a matter of seconds. 

Every interaction that we have with our customers is absolutely critical, and this is the new reality.

 

In 2017, distrust has gone viral. Companies are afraid to talk to their customers because the stakes are so incredibly high. We’re afraid to deal with those sort of situations. So the question becomes, what can we do about it?

How do we build trust and how do we make sure that our customers enjoy talking to us, and they feel a sense of trust with us? We need to figure out ways to speed up this process. At startups, how do we build a company that’s trustworthy from day one? Let’s take a look at the data.

The number one source of truth for people? It turns out people really trust themselves. Sampling a product or service is the most trusted source for information today. Product samples and free trials for software are the new norm. 

People trust themselves 

People want to see things for themselves. They want to try before they buy. If you have a tangible product, they want to experience it and make sure that it’s legit. People also care about word of mouth, editorial content and reviews

Let people get to know your product before you expect them to pay. 

Don’t try to sell them the full suite without getting them first using the base features. Next thing to think about is easy refunds and cancellations.

Now, from a company perspective, this can be really hard to deliver.

Refunds can be costly. Cancellations are annoying. We don’t want to have to deal with these two things, but building trust is a long-term game there are no shortcuts. 

Let’s look at Amazon. Each individual feature is outlined, and it’s very clear to see that with Prime you’re getting more bang for your buck. You can also see very clear and transparent pricing. You understand that you’re able to try this product, and you’re able to cancel at any time. There’s no frills here. It’s just the facts.

Get in, try our product, and if it’s not right for you, cancel. 

People trust their friends and family

In fact, 92% percent of consumers trust recommendations from their friends and family over traditional forms of advertising. We need to figure out ways to get our friends and family to talk about products.

For startups, this is an area where we can move faster than big companies. We don’t need major brand campaigns.

What we actually need is to build trust with our customers from day one.

For big companies, this is a very scary challenge. No longer can we hide behind major brand campaigns. We need to figure out ways to make sure that our experience matches what we’re claiming and advertising.

Let’s look at an example from Strava, the fitness activity tracking app, which has a highly engaged community. 

 On the left you can see what a Strava feed looks like.

There’s everything from publishing your run and also sharing your individual personal journey, but there’s also these great moments where you can share and interact with other Strava users.

There’s ways to comment and to like and to really build community, this community is highly engaged because if you’re a runner or a cyclist, you want that motivation coming from other people using the app.

Another thing to think about is Strava doesn’t just stick to their own community, they also leverage the power of Facebook. After every run or every cycle, this is automatically published to Facebook, that way friends and family and people that aren’t using the APP are able to still give you credit.

I always use the example whenever I publish automatically on Strava, the number one and number two comments are generally coming from my mom, and generally coming from my best friend, so it’s creates a really great opportunity where even though people aren’t using our app, they still feel part of that community.

People trust people like them

When you think about it, we’ve had enough of experts and paid influencers.

We’ve seen first hand with Fyre Festival that experts have their own incentives and sometimes those incentives are misaligned with their followers and constituents. 

Following Brexit, we’ve seen everyday people gaining power and influence in a country where government trust has been declining.

For companies today, the success of your company is truly in the hands of our customer, and when we look at the data here, you can see that a person similar to yourself is on par with an academic expert and with a technical expert.

Everyday people have power and influence.  

 

People trust people like them. 

Every company today needs to have a review strategy. Listen and engage on sites where people are talking about your product. It’s also also important to collect reviews in a controlled environment, build feedback and reviews into your core product experience.

Rent the Runway is a clothing subscription company and the great thing about the runway is they offer designer dresses for a reasonable rental fee.

Rent the Runway’s initial wedge into the market was weddings and formal events, so the stakes were high for them to get the customer experience right. Size, fit, delivery time and quality all matter. Through the use of profiles, Rent the Runway is able to leverage user-generated photos and reviews to build trust with customers.

It turns out the same came be true for buying software at work. G2 Crowd aggregates reviews from everyday people who use specific tools at work everyday. These unbiased reviews create a trusted source for individuals who are buying software for their company. The stakes can be even higher at work, you are putting your professional reputation on the line when you choose a new vendor.

 

In 2017 we’ve seen distrust has gone viral. In social media, every interaction can go viral.

One private conversation with your customer can be shared with millions of people in a matter of seconds.

My challenge to you: stick to the sources of truth. Now that we understand what it takes to build trust with our customers, let’s build trust into our product and let’s keep calm under pressure.

Thank you.

Companies and products mentioned in this talk: 

Fyre Festival – A music festival scheduled to take place on the Bahamian island of Great Exuma over two weekends in April and May 2017. Organized by Fyre Media founder Billy McFarland and rapper Ja Rule as a luxury music festival to promote the Fyre music booking app, the event was promoted on Instagram by “social media influencers” including socialite and model Kendall Jenner, model Bella Hadid, model and actress Emily Ratajkowski, and other media personalities, many of whom did not initially disclose they had been paid to do so.  Learn more here. 

Samsung Galaxy Note 7 – a now discontinued Android phablet smartphone that was produced and marketed by Samsung Electronics. On 2 September 2016, Samsung suspended sales of the Galaxy Note 7 and announced an informal recall, after it was found that a manufacturing defect in the phones’ batteries had caused some of them to generate excessive heat, resulting in fires. Learn more here. 

United Airlines Flight 3411 incident – On April 9, 2017, O’Hare International Airport Aviation Security Officers forcibly removed passenger David Dao, from United Express Flight 3411, after Dao refused to leave the aircraft as airline staff insisted. Aviation Security Officers were called and dragged him off. Dao screamed as officers pulled him out of his seat, and his face hit an armrest during the struggle. Officers then dragged him, apparently unconscious, by his arms on his back along the aircraft aisle past rows of onlooking passengers. Learn more here.