Keith Rabois & Mike Shebat: Creating an Olympian Mindset to Work Ethic| E1087

1. 0:00 – 0:41

   Intro

   1. HSHarry Stebbings0:00

      If you could change one thing about Founders Fund, what would it be? (electronic music)

   2. KRKeith Rabois0:02

      I think we need to... I don't think you should practice your pitch with mediocre investors because really good investors are gonna ask completely different questions. There's usually two or three things that matter and when you talk to a really good investor, it's so consistent how they dial into the same two or three things.

   3. MSMike Shebat0:18

      I do believe strongly that everyone should be joining a company more like a Olympic sports team. You need that level of commitment. You need that level of being all in. When you're an athlete that's not pulling your weight, you get pushed off the team.

   4. HSHarry Stebbings0:32

      I am excited for this. My word. I mean, I saw this email where you outlined the culture at Traba before, and I thought this was gonna be a really special show. So first

2. 0:41 – 8:22

   Work Ethic and Culture Insights

   1. HSHarry Stebbings0:41

      off, I wanna say thank you both for coming. Now second, I wanna start with some intros. Let's start with you, Keith. For those that don't know, which I think at this point is probably no one, who are you and what do you do?

   2. KRKeith Rabois0:54

      So I'm primarily a general partner at Founders Fund. I've been to DC for about 10 years after being a fairly entrepreneurial executive at companies like PayPal, LinkedIn, Square, co-founded a company called Opendoor as a side project, um, also CEO of 130-person company based in Miami.

   3. HSHarry Stebbings1:10

      (laughs) Um, love that side project. Mike, same for you. What do you do? What does the company do? And then additional one there, but how did you get to know Keith, and what's the relationship?

   4. MSMike Shebat1:21

      Yeah. So I'm Mike. I'm the CEO of a company called Traba, and we're a labor marketplace that connects workers with open shifts in the light industrial industry, and our mission is to empower both businesses and workers to reach their full productivity and potential. So what that looks like at scale is the AWS of labor across the global supply chain, things are moving faster, people are finding the right jobs at the right time, they're upskilling, and everything is just getting better around the world in the global economy.

   5. HSHarry Stebbings1:50

      Now, I did actually have, like, quite a neatly defined schedule and then you sent over the culture doc and I just thought, "Oh, fuck this. This is gonna be so much better if we have an honest conversation." So can you talk to me about the culture doc that you sent over to me? And start with what you expect in your approach, Mike. And Keith, I'd love for you to chime in with lessons that you have, observations that you have from seeing this from slightly afar.

   6. MSMike Shebat2:15

      Yeah. So when my co-founder Akshay and I started the company, we were thinking big. Just like how I mentioned to you, we plan on having a global impact, building a once-in-a-generation company. And when you go back and you look at any of those once-in-a-generation companies, Microsoft, Amazon, Apple, it was a group of people that were committed and they were working really hard doing something that doesn't happen oft-, uh, is very, very hard to make work. So our first value, dream big, that correlates very closely to our second value, which is Olympians' work ethic. So, eh, we were just like, "What we're gonna do is we're gonna work really hard together towards a common goal," and we only hire and promote people that are bought into that mission.

   7. HSHarry Stebbings2:57

      Can I ask, can you expand on that? What does the Olympians' work ethic mean in terms of expectations in office, in hours, in attitude? What does that mean?

   8. MSMike Shebat3:07

      Yeah. So it's a mindset. If you were to be in high school and telling everybody around you, "I want to go to the Olympics," there is a certain commitment with that. You're waking up early, you're going to practice, you're showing up with other people that are also trying to vie to go to the Olympics together. Uh, so what it means in practice at Traba is we're all committed to at least 12-hour days, Monday through Thursday. Friday, we're working late, but people do tend to go out on, on Friday night. But it's an in-office culture, just like how you could technically become an amazing baseball player by hitting balls in the batting cage alone, but the real magic happens is when you're practicing with the other teammates to prepare for the big game.

   9. HSHarry Stebbings3:50

      Keith, I have to turn to you here. You've backed, uh, astonishing, you've either founded or invested, and I heard this the other day, a unicorn a year for something like 20 years. Um, a ridiculous stat. Um, but my question to you is, like, when you look back at those that you have founded or invested in with similar trajectories, was this Olympian work ethic the same across all of them? Like, is this anything new?

   10. KRKeith Rabois4:14

       I wouldn't say it's necessarily all of them universally, but more than 80%. It's a very common characteristic of successful companies. I actually feel this is successful, or I- I observe that it's a successful characteristic of almost anybody successful in any field. I think, like, effort and input is what dictates results, and I think there's never been a substitute for, you know, effort and dedication to your craft if you wanna be top 1% in any field. And if you interview people in athletics, like, as Mike pointed out, Olympian work ethic, if you interview people in music that succeed, if you interview people in technology that have been successful, it's, in law, management consulting, investment banking, politics, it's always the people that work the hardest that have the most opportunities. And if you have the most opportunities, you tend to have the opportunity to thrive. And so, this is kind of basically how every technology company was built for decades. Um, only heroic people, really, who had incredible ambition and almost irrational ambition entered the field of starting a company with their friends. Like, it was basically borderline irrational to say, "I'm gonna reinvent the world and society or an industry from scratch with my best friend from college." And the only people who did that had traits that were unique and they had a work ethic that was unique, because that's how you shift the probabilities from literally zero to something that approaches, you know, a couple of digit percentage points. And so, you know, when we worked at PayPal, I actually joke with Mike all the time that he's actually top maybe one basis point in work ethic, and I was probably only top 10 basis points, but my absolute number of work hours was probably higher because the standards were so much higher. At PayPal, like, the idea of, like, having a day off was, like, inconceivable. Literally inconceivable. There was three people out of 254 people in the company that, when we sold the company, that could live in San Francisco 'cause the company was based in Palo Alto.There was no extra time to commute between Palo Alto and San Francisco, so it was, like, an insane idea to try to live in San Francisco even though we were all in our 20s and early 30s-

   11. MSMike Shebat6:12

       Mm-hmm.

   12. KRKeith Rabois6:12

       ... because you just didn't have an extra 20 minutes to commute. And so this is how we built companies. And Mike is really refreshing 'cause it's kind of, like, the traditional way of building a company which has been proven to work. One of the reasons why I introduced him to one of the, to this board member, uh, Samir Kole from Coastal Ventures is Samir was attending a board meeting with me about OpenStor, and he was complaining about the new generation of entrepreneurs that, you know, none of them want to work that hard, they're not entitled, blah, blah, blah, blah. And I, I was thinking it in the back of my mind, "Oh my God, I've got the perfect entrepreneur for you," because Mike has none of those traits. He's not entitled, he sweats the inputs, and he's built a very intentional culture with his co-founder that really does replicate the best of, let's say, PayPal or how, or Apple or Amazon were actually built.

   13. MSMike Shebat6:57

       So I, I, I work seven days a week. We have the funds and then the shows, and everyone says to me, and it fucks me off so much, "That's not sustainable." That, I mean, it's good for now, Harry, but you can't sustain it. I mean, look, we're 2,700 shows in and nine years in, so I'm still here. But my point to you is, how do you respond, and this is to both of you, anyone who wants to take it, how do you respond to those that go, "That's not sustainable," and, "You can't keep doing that"? I think it's, I think it's just simply not true. If you think about even, like, a traditional, say, like, a normal 9:00 to 5:00, usually the hardest working people, they, if they do actually leave at 5:00, they go home and they work on something else that's their craft. So, say they want to be the best piano player in the world, they're playing piano when they get home. And no one's saying, like, they don't even think about that as work. So when you're with a group of like-minded people that are working towards making the world a better place at scale and trying to build something incredible, it's actually, like, it doesn't feel like work.

   14. KRKeith Rabois7:56

       Yeah, to amplify that, it's momentum that matters. It's, like, progress that matters. That's what fuels you. When you know you're getting better, when the company's getting better, when the customers are happier, more delighted, et cetera, workers are making more money, that's what fuels you. But if you think about the, back to the Olympic work ethic, like, the people who become Olympians don't stop. They don't stop until their body basically can no longer compete with elite people. You know, if you look at the basketball

3. 8:22 – 13:25

   High-Performance Metaphors in Work

   1. KRKeith Rabois8:22

      players, the Michael Jordans and the Kobe Bryants, they're still outworking everybody who's 16, 15, 14, 13 with 500 to 5,000 shots a day. Notoriously, after playoff games, still taking more shots, making the staff keep up with them, waking up at 5:00 AM for more practice. That's what makes you successful in any field. People think DJs are these creative people that don't do any work. Most of the successful DJs I know play, like, 300 shows a year across the world until they make it, and when they make it, they still play 150 shows a year, traveling all around the globe. So, like, there is no substitute for success. It's, like, you have to decide when you wake up, "What is my life about?" And if it's about transforming the world, you have to take energy from somewhere and apply it, and it becomes self-fulfilling. Like, at the end of the day, you really do have this ambition to get better every day, and you don't e- it doesn't even feel like work. Back when we had, you know, watches and, like, not these to look at time, I used to joke with people that if you have to look at the clock in the middle of the day, you have the wrong job.

   2. MSMike Shebat9:26

      Yeah, and to be clear, nobody is looking at the clock at Traba. People... Time actually flies by. And if you even just think about most people, like, in a high school in the US, if they're trying to go to the best college, you just think about their schedule. They're waking up at 6:00, going to school, doing their classes. They may do athletics after class, and then they do their homework, and then they go to bed, and they repeat. We still, at Traba, people still go to the gym, people still take care of themselves, but it's just shifting a mindset of, like, "This is going to be my craft. We're gonna build something together." So people are showing up to work, they're working together, they're collaborating, they're solving problems. They have full context because they're in the room, they're visiting customers. Then people do, like, go to the gym, get a, get a mental reset, and then back to it with their colleagues. So it's almost... And I, I feel like a lot of high performers even across corporate America have felt this, where they're like, "Wow, like, I'm putting in so much effort, but 80% of the people at this company, they're just not pulling their weight. Like, why do I have to apologize for reaching out to someone at, like, 6:00 PM?" Whereas, like, early stage startups are very hard. Most of them don't work. So we want to self-vet and only have people that are opted in and excited about that. And it unlocks, like, a level in, of e- velocity and intensity that just doesn't happen at most places.

   3. KRKeith Rabois10:43

      And Harry, one of the most unique things about Traba is the consistency. So, Mike alluded to it, but it's worth, like, putting a very fine point on. Everybody at Traba is up to the same standards. I've seen a lot of companies where the top 10% are, the top 20%, top 30, top 40, but literally everybody at Traba is as committed as everybody else, and that's extraordinarily rare. And I think that's why the company succeeded.

   4. MSMike Shebat11:07

      Uh, w- we're gonna dig into that in terms of the depth of talent there and that mindset. I do just have to ask, though, we mentioned the parallels to athletes several times. There is a moment in athletes' training programs, workout routines, where rest is embedded and an extra hour in the gym won't enable them to actually be better. Is there ever a moment in work where an additional hour of input isn't actually worth the output? I think the right question is to ask, like, okay, for a certain number of input, what is your leverage on that time? It's not like we're saying... Like, people are sleeping, people are taking care of themselves, but it's a shift of mindset whereas, like, okay, if we're all committed to at least 60 hours a week of work, how are we leveraging that 60 hours a week to be the most high impact on the business and moving things on, moving things along even faster? The reason why I wanted to change the mindset is because if you know that not only you but all your colleagues are also going to be there at 8:00 PM-... you're not even thinking about pushing it out the next day, you're doing it that night. And then at scale, like over time compounded across a lot of decisions, the whole engine, the whole company moves so much faster. To answer your question more directly, people do rest. Like right now, people are going to spend time with their families during Thanksgiving, but every single individual has, like, has that on themselves. But they also need to know that, like, they should be pushing themself into hypertrophy, which is kind of the same way talking about a- athletics. Like, you're not actually going to get bigger unless you feel like, "Oh, actually now this is where it's gonna get hard." Like, you're doing 20 sets of bench press, like, if you're just doing that with very low weight, you're not actually making a difference. It's the same thing with work. People should be pushing themselves more and more. And that's how you know that you're actually moving fast enough.

   5. KRKeith Rabois12:54

      Yeah, so let me just, uh, apply the athletic metaphor too. It's not as if, like, let's say you're a football player, you don't just go to the field and practice all day 24/7. You might study film, and like, you might go home and spend four hours watching video of your opponent, and that makes you more successful. So your body is recovering, your, uh, but your brain is training, but you're spending every incremental moment watching that film, and that's what leads to what looks to be, you know, this heroic interception, but it's all based upon preparation.

   6. HSHarry Stebbings13:24

      I was gonna say, I love

4. 13:25 – 20:19

   Side Projects and Work-Life Balance

   1. HSHarry Stebbings13:25

      that. So I had... and I'm probably (laughs) gonna get in trouble for this, but fuck it. I had this kind of spar with Jack Altman from Lattice on the show the other day, and he said, "I encourage people to have side projects." And I said, "Why? That's ridiculous." Um, I personally would like you to go home, and if you're a sales rep, read about the latest sales tools, the latest sales techniques, the prospective clients we could be going after. You don't have to be in the office working at 9:00 PM, but improving what you do in the day, like you said there about watching tapes, improving your day-to-day processes. Do you want your people to also have side projects? Do you agree with me, or, or Jack?

   2. MSMike Shebat14:00

      I agree with you 100%. I think that in order to unlock greatness, you have to... I think Keith actually taught me this. Instead of, like, he talked about the pros/cons list being a farce, because in reality, not everything is equally weighted. You should actually g- What is that one thing that you want to do incredibly? And then go all in on that. So, you wanna hire people where it's like, "We are all committed to making a once-in-a-generation company. This should be everyone's top priority, and that's the type of people we wanna hire." Now, people can go off and do something in their careers later, having looked back and been like, "I learned so much by giving my all to that one thing." I even learned this myself. Actually, I learned this by looking at my little brother. My little brother, my parents put us in different sports in every season, and that's like spreading it out. It's like, "Okay, we're gonna do some of this, some of this." And when my little brother started getting really, really good at swimming, he dropped football, he dropped basketball, dropped baseball, and gave everything he had to swimming, and that unlocked, like, a next level of intensity and greatness, so then he ended up going to the Olympic Trials. And watching how much commitment he had to that made me realize that that type of mentality just doesn't work, 'cause then you're gonna be mediocre in everything. Whereas what you should be doing is going all in on the one thing that you want the most.

   3. KRKeith Rabois15:20

      Yeah, see, and Harry, I also agree with Mike that you need to develop your comparative advantage in life. And when you d- identify what that is, you wanna double, triple, quadruple down on that, and leverage that all day, every day. I do believe that there are things you can do that are maybe closer to what Jack was thinking, which is, what I'll sometimes do is I'll read books. Like, I have voracious appetite for reading. And the idea of reading the books is to spark ideas that I can l- later leverage in... So sometimes there's different time horizons of investing in yourself. Like, I read a book, it's probably not that practical for tomorrow. I'm not gonna come up with something from this book and, you know, send it to Mike, and he's not gonna apply it at Chaba tomorrow, or I'm not gonna apply it at OpenStore literally tomorrow. But years and years of reading quality stuff does occasionally lead to an epiphany or spark or an interesting idea that other people miss, and then I can leverage that. So it's like an investment. It just p-... with a different time horizon.

   4. HSHarry Stebbings16:11

      Keith, can I be direct? Well, y- you're an investor and a founder at the same time. Is one not a side project?

   5. KRKeith Rabois16:20

      No. You know, there, there is some tension. I, I, as I mentioned, you know, in a different podcast, on the investor side, I don't think there's much tension. Like, I actually don't feel like, for the most part, I'm compromising my ability to invest. Although, in theory, I can meet more companies. In theory, I can meet every, you know, early stage startup, and that would probably be good. But I'd probably be tired anyway and wouldn't be sh- as sharp as possible if I tried to do 24 hours of meetings with entrepreneurs every day. The side where the consequence is, is running a company, there are real trade-offs. And Mike reminds me of this every day. It not literally reminds me, just watching Mike, I am... reminded of what I could be doing with the incremental time when I'm serving on boards, when I'm meeting with founders or colleagues, when I'm taking new pitches. And there's real trade-off to my company they have to create alternative leverage for, a- and find other ways of adding value to offset some of the disadvantages. So there are real, real trade-offs to company building. I would not recommend that. As a VC, I think it's net very positive. There are things I reme- ended up being able to remember by having to work with my hands again, that makes me more, hopefully more useful to entrepreneurs like Mike. There are things, like, around recruiting, you know, there's things around, like, actually growth funnels that, when you have to do it for yourself, you remember some details that occasionally you can pass on. But, uh, I feel the stress every day a- at work in the company office.

   6. HSHarry Stebbings17:40

      I think also the operating, the decay rate on operating experience has never been greater. And so if you did something five years ago, pre-COVID, pre-OpenAI, and pre-ChatG... it just d- doesn't matter.

   7. KRKeith Rabois17:49

      It's terrible. Like, I, I took eight years between Square and taking over, you know, as CEO of OpenStore, and it's like muscle atrophy, you know, kind of going with the same metaphor. And it took me a f-... the first year, at least, to get back to be decent as a CEO. Um, and again, it was great to be working with Mike in contrast, 'cause Mike is a top, you know, top, top w- CEO.And so being able to see, like, how much (laughs) atrophy I'd have as a, as a, (laughs) as a CEO, I had to force myself to get up to speed. I think the second year, it started coming back and the muscle memory started recovering and, you know, maybe now I'm actually doing an A-minus job at least.

   8. HSHarry Stebbings18:29

      Mike, can I ask you, you know, we hear that culture and I'm very aligned to you in terms of it. Uh, honestly, I think a lot of people listen and will be quite shocked and will go, "Well, who would sign up for that?" How do people respond when you illustrate that culture and how do you think about their response?

   9. MSMike Shebat18:48

      That's a really good question because, to be honest, I look at their eyes when I interview people. You have to correlate the hard work culture to the dreaming big, which is the reality of the matter. Like, if I'm gonna tell somebody, "Let's get together and try our best to build a trillion-dollar business," and then I say, "That, of course, takes a lot of work and we wanna hire people that are committed to that, and I'm gonna be honest with you that this is what the company's committed to," you just look at your e- look at their eyes and if they are smiling and they say, "Actually, like, I already work those hours," or, "That sounds awesome, that everyone else around me will also work that, work that much," that's the right type of person. If it's somebody that's trying to justify or change something, you already know that they're probably not gonna be a good fit, which is completely fine. There's a lot of opportunities around the world that they can do, like, tons of jobs optimized for work-life balance, but that's just not us.

   10. HSHarry Stebbings19:42

       Yeah.

   11. MSMike Shebat19:42

       So we wanna find the people that actually are excited by that.

   12. KRKeith Rabois19:45

       Yep, and a good, Harry, a good illustration, and Mike, you know, can amplify this, is, uh, Mike hired a wonderful head of finance named Jessica. She actually proactively reached out to the company because she read about, uh, Traveler's culture and the dedication, the 996. She had worked in Asia and had watched and observed how all the successful companies in Asia have this work ethic and culture. And when she was moving back to the United States, she only wanted to work with a company that was just dedicated to winning and being successful. So she proactively reached out to Mike. So it actually becomes a magnet for talent.

   13. HSHarry Stebbings20:18

       I get you,

5. 20:19 – 26:32

   Work Culture: Global Perspectives

   1. HSHarry Stebbings20:19

      but how many people are there like that? Maybe I sit in Europe and so I see a different view. You know, we generally work about four hours a week.

   2. KRKeith Rabois20:26

      (laughs)

   3. HSHarry Stebbings20:26

      Um, (laughs) but we're very good at sitting outside with an espresso and a cigarette.

   4. KRKeith Rabois20:31

      That's why there's no European successful companies, Harry.

   5. HSHarry Stebbings20:34

      Ooh. (laughs) Okay.

   6. KRKeith Rabois20:35

      It, it, it's not accidental there hasn't been a $100 billion European company created since 1919.

   7. HSHarry Stebbings20:41

      You know what? I'm not gonna opine on this one, 'cause I'm gonna get ejected from my own continent, but, um, but like-

   8. KRKeith Rabois20:47

      Miami's great. We'll hire you here in Miami. You can move, we'll set up a studio for you.

   9. HSHarry Stebbings20:51

      But, but my question to you is, like, Mike, actually, are most people quite shocked by it and you just get used to that, and do you care? Like, do you care about the people on Twitter that go, "Ugh"?

   10. MSMike Shebat21:01

       I don't care because in reality, everyone, uh, if you want top of the bell curve results, so if you just think about a distribution, most people are in the middle. But you want out- outcomes that are on the far right, like basically top 1% outcomes. So it's actually better for me to be up front that this is what we do. And like Keith mentioned, we have enough people that are tired of being around middle of the bell curve results and want to actually, if they're gonna give their all to a startup, they wanna pull every lever that makes the probability of success as high as possible, and joining a, a team of like-minded individuals that can withstand any challenge that comes our way. Like, very low ego, high work ethic, understanding that startups are difficult. Like, the right people, we get so many of the right types of people who reach out to us and want to join that. So it's actually completely fine with me if people misunderstand or don't want to do that. I don't judge them for working less either, but I just, the outcomes are just gonna be different.

   11. HSHarry Stebbings22:02

       Do you ever get people who think they want it and then join and go, "Too much"?

   12. MSMike Shebat22:06

       Yeah, we do. We actually get people that think that we're kidding. Like, people will be like, "Oh, yeah, I'm gonna say the right things in the interview process." And then we have had people join and then they're like, "Oh, my gosh, these people are actually working past 9:00, 10:00 PM, like, every night." And by the way, people are happy. Like, the energy in the office is absolutely incredible. People are, like, stopping by each other's desks. It feels like we're all in, like, a college working on a very hard project, like, that's due the next day. Like, so yes, we do. We get people that... I've had people that have joined, said the right things in the interview process, and then we basically are like, "Okay, this isn't for either of us," after, like, the first week.

   13. KRKeith Rabois22:45

       Yeah. And Harry, just to reinforce that, I've been in Mike's office, um, you know, at 10:00 PM or, you know, the very unusual times, weekends, and the energy at 10:00 PM is better than 90% of companies at 2:00 PM.

   14. HSHarry Stebbings22:59

       (laughs)

   15. KRKeith Rabois22:59

       Like, without fail, by the way.

   16. HSHarry Stebbings23:02

       I, I, I mean, (laughs) I, I, I love that. Can I ask you? I, uh, w- we're all totally aligned. The one thing I do say is, "I will expect more than any other employer from you, but I will pay you more as a result." Well, I know what you're giving up and so I'll give you a bit of a bump, 10, 20% on market. Do you pay people more because you expect more?

   17. MSMike Shebat23:22

       Yeah, we do pay people well. There is a dynamic of being a series A startup where part of our success is to also manage our cash effectively, especially in this market. Part of what I get asked is, "Okay, you grew this much, this is your revenue growth rate, but how much capital did it take to do that?" So it's part of all of our collective success to also manage cash effectively. So what I would say is people do get paid well on cash. They get paid more than the average job. But the real, like, unlock for people to unlock generational wealth is the equity. And that's actually why it's an interesting, like, dynamic, because the more that you hire people that are too cash obsessed, the less likelihood that your equity, that everyone's equity will be actually worth a lot too. As we continue to grow and as the equity upside starts to not be as high of a multiple, it's natural that you continue to pay higher cash. But we do pay well above market, especially on the equity side.... but, and then with hiring the best people with the commitment, cash is, is also good. There's no question that a lot of people are also economically incentivized to unlock generational wealth by joining a series A startup that's on the trajectory that we're on.

   18. HSHarry Stebbings24:33

       I'm intrigued. When you look at... And this is for both of you. When you look at cash discussions and title discussions in the hiring process, are there any lessons from how people respond and how that will correlate to success or lack of success in a role?

   19. MSMike Shebat24:47

       100%. So if they're way too focused on title, it's an immediate red flag. Part of what unlocks the greatness in a startup is people basically thinking of their career as a rock-climbing wall. Like, "I'm gonna go over here, solve this challenge, go over here, solve this challenge. What's better for the overall company?" A startup is a team sport, so we, we have this, uh, tenet, which is one of our values, which is playing for the front of the jersey. So it's not about you as an individual. It is actually about solving problems. And when the company's growing, when you're hiring a lot of people, when you're take, onboarding a lot of customers, things are starting to break because of your growth rate, you need people that are putting down the, the hat of like, "This is my title," and just solving whatever problem is there, which is why I also, like I'm still visiting cu- like, selling to customers door-to-door. I'm very much in the weeds on the product. I'm like interviewing every single person that joins our company because I'm even like, uh, letting up DoorDash orders because I want people to be able to focus on their jobs. So, it's like, it doesn't matter what your title is, so that's the number one red flag. People that are way too focused on cash, uh, versus the equity, I do think that's more of a yellow flag. Like some people have things in their life that they have to pertain to, whether it's like student debt or families or things like that. But I do question, if you're joining a, a series A startup, you should be thinking about the equity value unlock more so than the cash. Um, so I don't compete on cash with large, mature companies, where their equity is only gonna go up like at the rate of the S&P 500 or anything like that.

   20. HSHarry Stebbings26:25

       Keith, what are your thoughts?

   21. KRKeith Rabois26:26

       I agree with everything Mike said, which isn't u- isn't that unusual.

   22. HSHarry Stebbings26:30

       (laughs) No,

6. 26:32 – 36:10

   Scaling and Sustaining Intense Work Cultures

   1. HSHarry Stebbings26:32

      I- I- I love that. Can I ask you, does that scale? Does the culture scale with time? When we think about it, you said you're a series A company. When you're a series D company, does that culture look the same then or do we regress to a mean that it, sadly we have to regress to?

   2. MSMike Shebat26:47

      Well, we're gonna try our best never to regress to a mean, but what I would say is the culture does adapt based on the risk profile that everybody takes on. So when we first started the company, we were actually in office at least six days a week, 12-hour days, and that's because we had a lot to like... We were basically up against the clock to get to a series A funding. So it, you need that level of commitment. You need that level of like being all in and dedicating everything to it, and that unlocked actually like an amazing series A. We have pulled that back a little bit to be more flexible as we hire different types of people, different roles that we need to f- fulfill. So for example, a head of finance versus an engineer versus a designer, we do all have like inputs that we do together, but as we become a th- an 1,000-person company, we will modify it, like what is the commitment together? But we will never sacrifice the, like high, high-velocity, high-performance culture. I do believe strongly that like everyone should be joining a company more like a Olympic sports team. It's not a family, it's an Olympic sports team, and like when you're an athlete that's not pulling your weight, you get pushed off the team.

   3. KRKeith Rabois28:00

      Another way I, you know, sort of apply to this is, I think you definitely do past X-thousand employees, see some regression to the mean, and the art is constructing some accumulating advantages, let's say a network effect before that happens, because the momentum of a network effect can offset some of the slippage in like quality. Um, although that said, you know, both Amazon and Apple were able to scale to call it at least 10,000 employees without regressing, uh, so it's possible. Um, I think other company cultures start regressing past 500. Some will reach 500-10,000, you see some decay. But if you establish the correct network effect, that can offset. I mean there's, you know, the Warren Buffett quote about, "Build a business that's, you know, (laughs) so powerful that even idiots can run it." So, you know, at some point, you do wanna erect something that's a true machine, that, you know, you're constructing the machine through human labor, effort, energy sacrificed. And at some point, you want the machine to be running, um, and the machine can run for a while before it decays.

   4. HSHarry Stebbings29:06

      Keith, having seen many different scale-ups in different situations, if you were to advise Mike proactively on when culture starts to break and how, what would you say are the most prescient points for you?

   5. KRKeith Rabois29:17

      You know, truthfully, the biggest mistake is usually hiring the wrong person. And everybody you hire, if you don't correct that person who's off on your culture and your values, will hire like ten more people like that, and all of a sudden, you've got a real problem. Mike is truthfully maybe the best I've ever worked (laughs) with. I think maybe the be- Yeah, almost certainly the best at this trait, is if he realizes the person's slightly off, he's gonna fix that person right away.

   6. HSHarry Stebbings29:43

      What does fix that person mean?

   7. KRKeith Rabois29:45

      First, initially give him strong feedback on why you're off, what's not acceptable, here's how you have to correct it, and if not, you know, edit the team appropriately. I think almost every other CEO I know, including ones who've been incredibly successful, probably procrastinates on that conversation a little too long.

   8. MSMike Shebat30:02

      And I will say here, another thing is on the positive side, I do look for something called a force multiplier at the company, and those are the people that I just wanna promote, give them more equity, give them more responsibility. And the reason for that is because at scale, you're building an engine, and I want to basically, when I do find somebody that is not only thinking about, "Okay, this is my job..."... what, how are they actually amplifying the cultural values that are important for success at our company? So, uh, I do tell my entire management team that it's not... your job is not about you. It's actually about the effect that you also have on other people. So if you think about any, like, micro d- behavior, like for example, let's say you're late to a meeting. If one person is late to a meeting, like three minutes late, that may not be that big of a deal if it's just one-on-one, but now you actually have a leader that's late three minutes to a meeting. Everyone now thinks it's appropriate to do that. Now everything is slower by three minutes, multiplied by the number of people that were in that meeting. If it's a, if it's an all-hands, even worse. The way that I scale the culture is I... Culture, like basically being a force multiplier is actually a component in all the promotions, performance reviews. How are you actually embodying the behaviors that we know that, at scale, let's say it's 500 people, that what you're doing actually would be what we want to see across 500 people?

   9. KRKeith Rabois31:23

      Yeah. Harry, if you read High Up the Management, you know, by Andy Grove, written in 1983, it's basically the same philosophy. Mike's translated it to Traba. Which is basically, everything's about what is a high-leverage activity? And high-leverage activities can have upside and they can have downside, and you need to stop the downside ones, like the three minutes late to the meeting, 'cause it multiplies, and then you need to amplify the positive ones, and you wanna filter people and your own calendar by whether something's a high-leverage activity or not.

   10. HSHarry Stebbings31:50

       Mike, do you celebrate wins? This is something I got coaching the other day. I don't. I think it just breeds complacency. Like, w- it just like... Yeah, I don't need a pat on the back. It's not kindergarten. Like, it's fine. But, like, I was told I was wrong and I was immature for thinking that way. Do you celebrate wins and do pats on the back?

   11. MSMike Shebat32:08

       We do celebrate wins. Uh, it's actually funny you say that, because when we hit a very, like, big milestone, I had given an all-hands to the company and I was like, "Here's what we have to be, be proud of." Like, "This is our unit economics. This is our growth rate. We, we actually doubted we could do it, and we actually far surpassed it." Everyone clapped, and then before people could stop clapping, I switched to the next slide, which was basically like, why most Y Combinator startups that (laughs) graduate Y Combinator end up not making it, and it's because they get complacent and they lose momentum. So, one thing that keeps me up at night is it's always this balance of, guys, we are genuinely crushing it. We should be very, very appreciative of this, and all these, all this hard work is translating into actual results. But then at the same way, you don't wanna get... You don't wanna have a feeling that we already made it, because we definitely have not already made it. You don't make it until we end up IPO-ing and actually, like... Actually, I don't think we'll ever feel like we've made it. It's always day one. It's kind of like somebody gets into Stanford, and their parents just drop them off, and they just worked so hard throughout their entire, like, childhood to get into Stanford, and then they sit in their dorm room and they don't actually apply themselves to use that to do great things with that Stanford degree. It's similar with the situation that Traba is at right now. We just raised an incredible round of financing based on real results and great people, and we... And when I look around the room, I'm like, "I can't believe I'm fortunate enough to work with all these awesome rock stars," but I also know that, like, if we just all get complacent and comfortable, which happens to a lot of companies, like, next quarter is not guaranteed to be as good as this past quarter. So we're always thinking like, "Okay, what's next? How can we increase velocity and work even harder?"

   12. KRKeith Rabois33:54

       You know, one metaphor I like to use for this is like, imagine you're playing in a, a, like, football, let's say, in America. You win the Super Bowl, but you're on- you have to go back preseason start all over in training camp and your record's zero and zero again, and you have to reiterate everything. So what you think about that is every calendar year at a startup or every time between funding, you win a Super Bowl, you've been perfect, you've been better than everybody else on the planet, but you go back and you have to start from scratch again.

   13. MSMike Shebat34:22

       Another analogy, really quick on that, is like going back to the Olympic athlete example. Like, just because you got a gold medal, it's not, it's not actually just a binary outcome. You also have a time that goes along with that. So like, sure, we could go raise another round of financ- financing and that round hit. Or h- say we actually could IPO, but like how actually big is the company? Like that actually is a result of a lot of the inputs that happened up until that point. So you wanna actually sha- you don't wanna just break the world record, you want to shatter the world record.

   14. KRKeith Rabois34:53

       Yeah. Like, so for example, let's apply this to a startup. At LinkedIn, by any measure, was, you know, pretty successful. Certainly impact, you know, acquisition, 24 billion or so. Truthfully, probably hit somewhere between five and 20% of its, uh, uh, you know, potential, um, because it didn't do some of these things. Like, I... In my mind, it still compell- you know, it still drives me crazy that LinkedIn wasn't more valuable than Facebook. It should have been.

   15. HSHarry Stebbings35:18

       Can you unpack that for me, Keith?

   16. KRKeith Rabois35:20

       Yeah. We didn't have an Olympic work ethic. We had a bunch of French engineers that wanted to work 35 hours a week. At the time, in 2003 to '5, when the company was really founded, most people thought the internet was dead. So Reid, didn't... Reid Hoffman, who founded the company, really couldn't get the stellar quality of talent that Mike was, Mike's been able to tap into, and it started, you know, it was sort of propagating. And those people hire 10 people like them, and then all of a sudden you have a mediocre culture with a brilliant idea and a great viral distribution. So yeah, again, 24 billion for most people is acceptable. Mike will be disappointed himself (laughs) if he stops at 24.

   17. HSHarry Stebbings35:58

       (laughs) I, I, I love that. Can I ask you both? I believe, Mike, you've got kids, no?

   18. MSMike Shebat36:03

       No, I don't.

   19. HSHarry Stebbings36:03

       You don't have kids. But okay. Well then, Keith has this-

   20. KRKeith Rabois36:06

       He's got 49 of them he has to manage every day. (laughs)

   21. HSHarry Stebbings36:09

       Well then,

7. 36:10 – 41:09

   Parenting and Maintaining a Strong Work Ethic

   1. HSHarry Stebbings36:10

      well then, Keith, this might be more directed at you, but it's just like when you think about the work culture and the commitment required for working at Traba or working in this environment, can you do that and be a parent?

   2. KRKeith Rabois36:21

      Yeah. I mean, I think you can. So I remember when I was a lawyer...The last month I was a litigator at Sullivan & Cromwell in New York, I billed 360 hours. I bet you almost nobody works in the startups, works 360 hours. That's billed, by the way, not worked. And many of the people I competed with in my class of associates actually had kids. One woman, uh, Sharon, who is, like, a classmate of mine who's now a partner, she's a very successful partner at Sullivan & Cromwell, had kids. So you can be very successful if you have kids. Um, you know, there's touring artists and music that have kids. Um, it, it requires you to be more disciplined, like about your time allocation. It tends to amplify things if you're really disciplined. Maybe you can do better with kids. Um, you know, Delian's about to have a kid. I'm sure he's gonna become just as good or better an investor, you know, with a kid than he was before.

   3. HSHarry Stebbings37:09

      I, I'm thrilled to hear it. I've been nervous about it, bluntly. I do have to ask you, you said before, Mike, your 20s should be pushing yourself to grow. And a lot of other people are like, "Oh, 20s actually is when you're traveling, when you're seeing the world, when you're ingesting every bit of knowledge you can." But like, you know, you're traveling and you're experiencing the world in your best form. What are your thoughts?

   4. MSMike Shebat37:33

      I think actually, I do believe that your 20s, you should be really pushing yourself to learn, like, do as much as you can to figure out what you're gonna double down, triple down on in your life. I would say I even saw this from people with, in my high school. Like, a lot of people, they, they graduated, they did travel, they optimized for work/life balance, and then compounded over a decade, like, it really does change the trajectory of your life.

   5. HSHarry Stebbings37:56

      Mm-hmm.

   6. MSMike Shebat37:56

      So I would say that people can certainly travel, they can do certain things in their 20s. I'm not saying that people need to, like, be, like, in a room, like, not doing anything. But I do think that people need to be thoughtful that time is going by and as you are, like, basically optimizing for, what? Like, sitting and watching Netflix, social media, just being very thoughtful about how you're actually spending your time, is that actually growing you and developing you so that when you are doubling down, tripling down, you actually have the highest likelihood of success?

   7. KRKeith Rabois38:27

      Look, I can amplify that. I think, first of all, in technology, the opportunity cost in your 20s is very high. If you look at a lot of people who've been most successful, the foundations of their career are in their 20s. It's a little bit like sports. If you were gonna be an NFL player, NBA basketball player, NBA, uh, you know, Major League Baseball pitcher, the idea of taking time off in your 20s would be literally insane. Technology has some of that. Um, if you wanna read some interesting content, uh, Steph, Steph Cohen, who co-founded Palantir, and Sham, who's the CTO, have both written blogs and Twitter, like, uh, threads about how you're committing, like, professional suicide by investing your time with distractions in your 20s. I think there's something to sampling, as Mike pointed out with his younger brother, sampling different things in life. Like, I sampled being a lawyer, I sampled some politics and then figured out what I really should be doing is, you know, building technology companies. So sometimes you do need to sample to figure out where your comparative advantage is and where to double down. But that's an investment, it's a conscious decision. It's not like, "Hey, I'm gonna go see the world" or "I'm gonna sit back and watch Netflix."

   8. MSMike Shebat39:29

      That's why joining Traba in your 20s, like, a company like Traba, is actually by far the right move. Because if you are in your 20s, you have all this energy, you actually wanna, like, reach your full pro- productivity, productivity and potential in this, in this life, why would you go work at a company where you could actually put, like, 50% effort in, you could just, like, be on, be on Zoom but, like, actually be going to, to doing something else? And you're never worried about, "Oh, am I actually gonna get laid off?" Like, you're basically wasting a whole decade of time in an area that's actually not pushing you. It goes back to what I talked about earlier with hypertrophy. You should actually be putting yourself in situations to grow from and actually surprising yourself and being like, "Wow, I actually am capable of doing this." Like, you actually see people that accomplish great things very, very young, and it's because they're putting themself in the situation to actually challenge them.

   9. KRKeith Rabois40:20

      Yeah, some specific examples. Why do you think the Thiel fellows have been so successful? Or YC founders, why have they been so successful compared to normal distributions? It's because they invest their time early in their careers in doing things that are challenging, and they stretch themselves, they challenge themselves through the hypertrophy model. And those pay dividends and th- they may, you know, have luxuries later in life because they invested. The best people, most of the best people I've ever worked with in my career were actually interns. They re- you know, and they took advantage of being an intern. You know, we talked about Delian, we talked Tony at DoorDash, uh, Taylor Francis. Like, these people invested very consciously early in their career, putting themselves in a position to be challenged, to learn as much as possible, and then double down and leverage that as fast as possible. And that's how you generally break through in any field.

   10. HSHarry Stebbings41:08

       I

8. 41:09 – 45:30

   Early Entrepreneurship and Its Impact

   1. HSHarry Stebbings41:09

      got two questions that I have to ask on the back of that, and they're kind of bold statements, but I do believe them. One, I find that all the greatest entrepreneurs that I see, I invest in, I work with, whatever that is. But the greatest entrepreneurs start some form of entrepreneurial project early. They're 13, 14, building websites. They could be selling cookies at their school. But they start entrepreneurship in some way early. Do you both agree with that?

   2. MSMike Shebat41:34

      I do agree with that. It depends on, uh, I think that developing the skill of resourcefulness and basically being like, "Here's where I wanna go, and I'm not gonna just take, like, these arbitrary rules or this system around me as an answer for that." I think developing that at a young age is very important, whether it's like, "Okay, my high school counselor said that it's impossible to go to this college because I don't have the right criteria. I'm actually gonna find a way around that." Like, there's actually a general partner at Founders Fund named Trey, we were just at his 40th birthday party, and one thing that was mentioned was that he didn't get into Georgetown the first time and he literally went and, like, set up a tent in front of the admissions office and was like, "I need to get into this school," and ended up getting in. Like, I think that you need to develop, whatever it is, I think you need to develop that mindset at a young age that whatever gets told to you isn't actually the answer right off the bat, 'cause it was just generated by a system and people that are probably actually optimizing for the middle of the bell curve and, like, the mean.I think that whether it's building websites or other, or other entrepreneurial endeavors, or trying to find your way into, like, some system, I think that that type of mentality is very, like, important as a young, uh, person.

   3. KRKeith Rabois42:48

      Paul Graham wrote this fabulous blog post called Relentlessly Resourceful, which is, I think, the trait that Mike's alluding to. And I think to be successful as an entrepreneur, you need that trait on steroids. And, you know, my guy also shares a philosophy that almost every trait that's important you develop early in your life, and there's evidence of it. So, like, work ethic, intensity, resilience, resourcefulness, it shows up very, very early. As Mike alluded to, you know, Trey, when they were roasting Trey, they gave examples as early as high school of, like, you know, ways he was relentlessly resourceful, and that shows up later when you're building companies, when he's co-founding companies. And I think everything that leads to success is actually shaped much earlier than people realize. Per your point about children, I do have, you know, kids that are two and a half years old. I've already tried to (laughs) inculcate all of these values, like, and I'm not accepting any excuses. Other parents are like, "You're crazy." I'm like, "No, these kids are gonna have these traits now."

   4. HSHarry Stebbings43:45

      If you put 20 VC on in their nurseries, it actually just subtly imbue-

   5. KRKeith Rabois43:49

      We'll test it out. We're gonna test it out.

   6. HSHarry Stebbings43:50

      ...yeah, yeah, yeah. Ch- Jacob will come home and be like, "Keith!" (laughs)

   7. MSMike Shebat43:55

      (laughs)

   8. KRKeith Rabois43:55

      (laughs)

   9. MSMike Shebat43:55

      He does that anyway, don't worry.

   10. KRKeith Rabois43:57

       (laughs) Yeah, he already thinks I'm crazy.

   11. HSHarry Stebbings43:59

       The, the question I have to ask, and I, I want to le- I, I use this show as a learning mechanism. I always have done. Um, I don't like first-time founders and I want to be learned from you guys here. But I don't like them 'cause I feel that there's so many mistakes one makes in their first company that you would never make in a second or third. And if runway and time is the killer of progress, you waste so much time hiring the senior execs before you should, finding PMF, customer discovery, all of these things. Why am I wrong to not like first-time founders?

   12. KRKeith Rabois44:30

       I think first-time founders are actually better on average. Um, most of the best companies I've invested in are first-time founders. Not all. Um, but, and I think part of it is ambition. Uh, part of it is you don't know what you don't know, which means you don't accept any rules. Like, once you learn too much, even as an entrepreneurial person, you take in, you take in some of those and they're not always right. I think the best thing you can do though, and we had this side conversation, a Twitter thread about this, is pair yourself very well with either investors or board members who can help identify some blind spots, sometimes when the grass isn't quite greener, so that you can take advantage of those lessons while you're a first-time founder with all the positive energy and all the positive, no excuses kind of, sort of mentality that most second-time founders have. I mean, you know, obviously I think I've learned some things and I have avoided some mistakes at OpenStor, but in some ways I wish I had done some things naively.

   13. HSHarry Stebbings45:29

       What are the

9. 45:30 – 52:12

   First-Time Founders: Mistakes and Lessons

   1. HSHarry Stebbings45:30

      biggest mistakes, Keith, that you most often correct first-time founders on?

   2. KRKeith Rabois45:32

      The, the biggest mistake was not being as intentional as Mike and Akshay about the culture in the very, very beginning. And, you know, I have this metaphor of culture is like concrete in, in liquid, in liquid form. Concrete's really malleable, but once it solidifies, it takes, like, a jackhammer, which is incredibly disruptive, painful, expensive to break. I was a little too, I was a lot too passive in letting the culture formulate, um, in the first year, and I really have struggled to fix that.

   3. HSHarry Stebbings46:00

      Can I ask you, Mike, when you think back on the decisions you've made that you've been a mistake and you wish you'd done differently, what do you think those have been? If Keith's there was the culture and he should have been more intentional from day one, what would yours be?

   4. MSMike Shebat46:13

      I think when I was first starting the company, you think everything has an equal weight of importance when in reality you wanna spend your time as you're scaling on the most high leverage, uh, activities-

   5. HSHarry Stebbings46:24

      Mm-hmm.

   6. MSMike Shebat46:24

      ... that are actually gonna 10X the business. So it, it's that balance of sweating the details where every, every detail does matter, but then when there's only a finite number of hours in a day and how much energy you can apply towards something, I think I've, I've grown as a founder where I've been like, okay, here's, like, as I'm starting my day today, what's, like, the most important thing that, like, is critical to the company? And I should be, like, putting my time towards that and then being, then learning the skill of, like, delegating the other things, but then, and, and then while still pressure testing. But I think when I first started, every single detail had an equal amount of importance. And actually Keith, being, uh, around the table for the, the whole journey, he actually did give a, a metaphor of, like, I'm operating more like the army, where the army is, like, very much, like, operational efficient across everything, no, no mistakes. Whereas what I should be doing as a founder is being more like a Navy SEAL, like, going all in and, like, really applying myself into, like, the highest leverage activities.

   7. HSHarry Stebbings47:27

      I'm gonna go there on something, but why not? Um, yeah, you know, Founders Fund's kind of motto is like, "Don't fire the founder." Um, great. Keith, you must have invested in people where they're not as good as you think they are and they don't live up to expectation, and actually they don't listen to you for whatever reason. What do you do then? I'm asking because I have this case now and I'm like, "What the fuck do you do?" (laughs)

   8. KRKeith Rabois47:51

      Well, look, ve- I mean, venture is a lot like baseball in the United States. If you're world class, you're right 40% of the time. And I define venture as seed stage investing, Series A investing. 40%, hall of fame Ted Williams tech category. So by definition, 40% right is gonna lead to 60% not being right. (laughs) And it's partially 'cause it's such a big challenge. Like, reinventing an industry is like this heroic effort. Uh, you know, our partner, Trey Stevens, says, "Building a company's fucking hard." Like, direct quote, you know? (laughs)

   9. HSHarry Stebbings48:19

      (laughs)

   10. KRKeith Rabois48:19

       And it really is using, worth using a direct quote 'cause it signifies how challenging it is. So being 40% right and 60% wrong is what you're kind of signing up for. Um, what I care most about is that people leverage their ambition, their talents, their skills.... to the highest potential. Not everybody is gonna be a Major League Baseball pitcher, even though a lot of people start in college, high school, junior high school and try. And if you have that potential, you wanna fulfill it. And so that's most exciting. Like I don't expect founders to listen to me, by the way, just to be clear. I almost never tell a founder what to do. I do have feedback, and hopefully insightful feedback about, hmm, my kind of spidey sense of what's working and what's not. Almost like a cartoonish mirror at a haunted house, try to exaggerate the positives and exaggerate intentionally the negatives, and play it back to the founder and say, "Is this what really you think you want to be doing?" Um, you know, I- I... (laughs) There's probably only one time I've ever told a founder what actually to do, (laughs) um, and it was Mike. But it's kind of a m- kind of an amusing story. (laughs)

   11. HSHarry Stebbings49:27

       Can I, can I ask you, Mike, how do you think about one, soliciting the help that you want from the investors you have around the table? And then two, sort of aligned to that, someone like Keith's voice is, uh, it carries weight. How do you make sure that you bluntly don't place too much weight on it (laughs) and still keep an independent mind?

   12. MSMike Shebat49:46

       Yeah, that's a good question. I think it's having... Well, first of all, whenever I think about learning and, like, learning what kind of decision I need to make, I do think about, "Okay, is the person that I'm learning from, do they actually, have they actually done the thing that I want to accomplish?" So when you think about all the information out there, you can read blog posts from people that have never actually started a company. A lot of people have opinions, but it is about filtering, "Okay, who, where's the right opinion?" And then what you find is actually, there's so many things out there that they start to actually contradict. So I think that it's marrying, like, the weighting of people that actually have, like, proven themselves, and Keith has definitely done that. He's been around the table with countless successful companies, like you mentioned, like Airbnb, DoorDash, a lot of them very operational, similar to Traba, Fare, Ramp, plenty of them. So I do, like, respect his judgment on certain decisions, and then I have to marry that to the context of what makes my company different. So it, what, what kind of people work at Traba, like, they also are, like, empowered to make a lot of great decisions because they're also closest to the customer, closest to the actual product development. There is general feedback, but then I do think it's important to apply it to your company and your customer and the problem that you're trying to solve.

   13. KRKeith Rabois51:02

       It's worth emphasizing that a lot. Every company that's successful is like a cult, and every cult that works is unique. And so if you just take general feedback and apply it to a unique situation, it can often be, you know, bad. Like, really bad. And so I think that is exactly the role of a founder, is what am I building, what's special, what's unique, what's differentiated about what we do, our company culture? And then how do I apply general frameworks to my specific talent pool, my specific market, my specific culture? This is actually, like, specifically... Like, I'll give you another illustration of another founder who thinks like Mike does. So Max Roet, who worked with me at Square and now runs Scale, when he asks me difficult questions, he actually starts the question with, "What's the right framework to think through this problem?" It's never, "What's the right answer?" It's like, "Do you have a conceptual framework that I can apply to my company?"

   14. HSHarry Stebbings51:52

       Can I ask, what do you think are the frameworks which are malleable to companies across stage or sector or space? Like, what are the frameworks which do apply across and you should take and learn from?

   15. KRKeith Rabois52:04

       Like, let's, let me give you an extreme example from, like, kind of public domain. Most people say you should build a company that's transparent, right? Like, you hear this all the time, transparent, blah, blah, blah,

10. 52:12 – 1:02:04

    Company Transparency and Investor Relations

    1. KRKeith Rabois52:12

       blah, blah. Apple, which is the most valuable tech company on the planet, is completely non-transparent in every possible way. Employees are not allowed to go to the wrong buildings, they have separate badges, they're not allowed to know what other employees are working on, et cetera, et cetera, et cetera. Obviously, the mainstream advice clearly doesn't work to build the most successful company in the history of the planet. (laughs) To some extent, you know, that's, that's the point, is, like, there isn't a right way to do things. You have to figure out why what you're building is special and differentiated. You know, if you read Zero to One, Peter talks about both cults and secrets. So you have secrets about the world that you believe that other people don't subscribe to, and that's what powers your competitive advantage and that's what you're doubling down on. Apple has lots of beliefs about the world that most people don't believe in, but that's why they're very successful. And you can't, like, apply that... Like, nothing that works at Apple would work at Google. Like, everything Google does is completely in antithesis to Apple. And so that's why you have to have, like, a philosophy that accommodates successful examples, and then you apply that philosophy to what you're trying to do. If you have a monopoly... For example, Google has this 20%, you know, side project bullshit, or they used to. If you have a monopoly business with 99% gross margins or 90% margins, maybe letting your employees waste time once in a while maybe isn't catastrophic. Most of us do not run pure monopoly businesses with 90% margins, so that would be catastrophic to our businesses. That would be catastrophic to DoorDash. It would be possibly catastrophic, uh, to Traba. It would definitely be catastrophic to OpenStor.

    2. MSMike Shebat53:40

       Yeah, and I'll, I'll say, like, another thing that we even experienced at Traba with a framework that may apply to general marketplaces that we basically... So for example, both, like, like, like Keith mentioned, Samir Khosla, eh, is on our board and, and Keith is also there. Um, there's this framework in marketplaces where because usually the supply side is very hard to acquire, so the supply side for us is the worker, um, and I'll give an example. For Uber, drivers are hard to acquire, they're expensive, you have to find them, you have to make sure that they're ready with their car at the right time. Most investors are conditioned to think that because the worker side is the harder side of the transaction, you basically need to have, like, a market-by-market, you basically need to, like, launch a certain market, go all in on the market, make, like, a bunch of selections. So on, on Uber Eats and DoorDash, people want different cuisine types, you want a bunch of different restaurants. For Traba, workers, there's... Workers flood to our platform because there's several, like sometimes hundreds of workers that are, like, on the same shift at a given time, so there's network effects within communities that go two shifts together. So our worker CAC is very, very low.So the business side of the transaction is the transaction that we're focused on. Um, that's one dynamic that we have to educate investors and educate even new employees, that like, we are a demand-constrained marketplace.

    3. HSHarry Stebbings55:00

       I, I always say to founders, don't try and educate investors. If you need to educate them, it's just, just too hard.

    4. KRKeith Rabois55:07

       (laughs) Well, you're, you're actually r- You can... You guys are both right, actually, because when Mike discovered this, it was the Anomalist data that we were looking for at Founders Fund, and so it immediately resonated with us to see that it was a demand, you know, it was the opposite that you'd normally see. But you and I, I think I agree with you, Harry, that once you're having that conversation and trying to educate investors, they either notice that and they spot it, and they're like, "Oh, my God, this is amazing," or they don't, and just, just avoid them.

    5. MSMike Shebat55:35

       (laughs)

    6. HSHarry Stebbings55:35

       Yeah. Well, but when it's like, "Talk to me about cloud," and you're like, "Fuck, we're gone." (laughs) "We're out." Like, "This is just not gonna work." Um-

    7. KRKeith Rabois55:43

       Well, this is why, like, to give advice to entrepreneurs who are listening, actually, I don't think you should practice your pitch with mediocre investors, even though lots of people give that advice. Because really good investors are gonna ask completely different questions, and you're gonna just mislead yourself by practicing with mediocre investors, and then you're gonna get a really good investor, and they're gonna ask you completely different questions, 'cause you're gonna dial into what actually matters, and they're... And you can almost tell, like, you know, I get to work on both sides of the table because I'm raising money from investors, pitching them, and then obviously hear a lot of pitches and watch our portfolio raise money. There's usually two or three things that matter, and when you talk to a really good investor, it's so consistent how they dial into the same two or three things.

    8. HSHarry Stebbings56:25

       I agree. I think the hard thing is that, honestly, most people don't meet the good investors. Like, it's like this-

    9. KRKeith Rabois56:30

       Well, send them to me.

    10. MSMike Shebat56:31

        (laughs)

    11. HSHarry Stebbings56:32

        La- I, I mean, but then my, my question to you is, actually, could Trava or could any of the companies that, you know, you've worked with, Keith, be built outside of the ecosystems they were in? We joke about Europe, but could they have been built in Europe? Like, how important is that local maxima of talent that you have, Mike, in Trava, but it's in-person, in-office?

    12. KRKeith Rabois56:53

        Well, personally, I believe you need to be in person. So when Mike started the company, he and Akshay were courageous because at the time, there was this consensus view that people could work remotely in distributed ways, and blah, blah, blah, blah, and the world could change, and COVID, blah, blah, blah, blah, blah. And they were like, "We're doing an in-company, an in-person company only, period, like six days a week." Now, I think more people have realized that that is the correct way to build a startup, but three years ago, that was incredibly contrarian. And, you know, we at Founders Fund have pretty much put a line in the sand that we won't invest in remote companies, because we've just watched 50 years that there's almost no examples of people building companies that way, and there's lots of... If you've actually been a founder, if you've been a CEO like Peter has, if you've been a CEO and founder like Avin, if you've been a co-founder like Trey, you just know why. It's very obvious why it doesn't work, and so we immediately filter that way. But I have to give Mike a lot of credit because that was not almost like an acceptable view to have. But we have a great company, Trade Republic in Berlin, run by a very, actually, s- a founder who's very similar to Mike in terms of DNA, Christian, and it's doing very, very well. Uh, we have a board meeting actually later today, uh, so it's possible, but I think it takes a courageous, confident, no excuses, tenacious founder to pull it off.

    13. HSHarry Stebbings58:14

        Mike, how do you feel? Could you have built Trava somewhere else?

    14. MSMike Shebat58:17

        Well, Trava was very intentionally built in Miami because we did want to be close to our customers, and Miami was our first market. So, I do think it's important that when you first start a company... I mean, we're in the business of helping get the right workers at the right time to, like, hundreds of distribution centers, warehouses, food processing facilities, so the only way that we're gonna know what these customers need is to actually go be with them in person. So, starting in Miami was definitely the right move. I do think that being different than most... I mean, we were working six days a week, 12-hour days in Miami, Florida, where people do... Like, there's beautiful beaches there. There's like, a lot of things to do. People would be like, "Okay, I'll move to Miami, work at Trava, dedicate everything to actually making this company work, building relationships that will last a lifetime, go through a lot of challenges together." And I did work with Uber in a lot of countries that... Like, like France, like Netherlands, Egypt, and even though most of the population may have a certain culture, I do think that being very unapologetic and saying, "This is what we are," and you can opt into it, I do think you can still find, like, the top 1% of people in those communities that will opt into that. The risk is when you're too, like, open and aren't, uh, like, aren't up front with what actually you want to commit to, and that's when you h-hire people that are all, like, all over the place in terms of what their commitment level will be.

    15. HSHarry Stebbings59:44

        I, I totally agree with you there in terms of being up front. Final one for a quick fire. Keith, you just said about kind of, uh, you know, r- remote work not generating great companies. You have your GitLabs and your Zapiers, and I'm seeing like, uh, a lot of people on Twitter be like, "Oh, Keith, you're so wrong on this one," and so I'm gonna get in trouble if I don't ask it. Are you saying that actually-

    16. KRKeith Rabois1:00:02

        Well, okay, yeah, let's talk about it. So I actually sourced GitLab for KV. We are the seed investor, um, and I met them in YC office hours, and I knew they were special. I think if you build an open source company predicated on open source software in a distributed way because you have thousands of contributors or hundreds of contributors all around the globe to open source software, and you're managing and corralling the contributors, it's a very special exception, but I knew it, and I knew it right away. So, um, I'm not gonna accept, like, Twitter people, like, from, you know, who have never found a successful company criticizing it when I knew that I found the exception in the last decade. Um-

    17. HSHarry Stebbings1:00:36

        (laughs)

    18. KRKeith Rabois1:00:36

        You know, and Lastly, I don't think was actually built the way people remember. I don't know all the details, but as I've probed a bit, I don't think it's quite as clearly true, that it was built that way, that it was built remotely.

    19. HSHarry Stebbings1:00:46

        No, no, I know. I had Scott on the show, and he's a friend, and I, I mean, it was a, it was a conscious decision, but not from the early days. It was, you know, post-

    20. KRKeith Rabois1:00:53

        Yeah, exactly. So, maybe when you have a network effect, maybe when things are going perfectly-... um, you could build a remote company. Like for example, Airbnb is. Uh, Mike alluded to, I invested in the beginning with Airbnb. You know, obviously they've gone to a remote culture, but they have the best network effect business I've ever seen. And if- if you ask Bryan or Joe, "Would you start a company from scratch today as a new founder?" I can guarantee what that answer is. (laughs) It's not gonna be, do it remotely.

    21. HSHarry Stebbings1:01:19

        Why is it the best network effect business you've ever seen?

    22. KRKeith Rabois1:01:22

        Well, 'cause you have a network effect across markets, so like, you know, for example, um, typically you have a local network effect, so like Trava. Trava has some cross-market, actually, network effects too. But Airbnb's great because you have travelers, let's say, going from China to New York and vice versa, and that's pretty rare when you can actually literally spread across markets. You have a local network effect, like the more hosts you have, the more matchmaking you can do. So like there's... The more supply you have, the more likely I can find what I want at the price point I want, in the neighborhood I want, with the layout I want. But then also, once I've been to New York, then I can take it back with me to Miami. And so that's extraordinarily rare.

    23. HSHarry Stebbings1:02:02

        No, I- I completely get that. Okay,

11. 1:02:04 – 1:06:43

    Quick-Fire Round: Leadership, Investment, and Business Strategy

    1. HSHarry Stebbings1:02:04

       listen, I wanna do a quick fire round. So I say a short statement, you give me your immediate thoughts, and I'm gonna direct them, so don't worry, it's not gonna be a free-for-all. Mike, you can be CEO of any other company for a day, which would it be?

    2. MSMike Shebat1:02:13

       If only for a day, I think it would be interesting to, uh, be the CEO of The New York Times.

    3. HSHarry Stebbings1:02:19

       (laughs)

    4. KRKeith Rabois1:02:20

       (laughs) That's great. But yeah, uh, he's already taken. He's taken over Open Store for a day.

    5. MSMike Shebat1:02:25

       (laughs)

    6. HSHarry Stebbings1:02:25

       (laughs)

    7. KRKeith Rabois1:02:25

       (laughs)

    8. HSHarry Stebbings1:02:25

       You haven't actually done that, have you? No. You haven't swapped roles.

    9. KRKeith Rabois1:02:28

       I haven't. (laughs)

    10. HSHarry Stebbings1:02:29

        Uh, Keith, where do interest rates go from here?

    11. KRKeith Rabois1:02:32

        Uh, they're not going much down. I mean, I think we have sustained inflation for structural reasons for a decade. You know, plus or minus they might be slightly alleviated, but there's a lot of very strong reasons why this zero interest rate or low interest rate environment was a, you know, one time in history kind of world.

    12. HSHarry Stebbings1:02:50

        Mike, what's the right way to view competition?

    13. MSMike Shebat1:02:53

        Like, basically be aware of competitors, but not too obsessed over them.

    14. HSHarry Stebbings1:02:56

        Keith, 2024, are we more optimistic or less optimistic than 2023?

    15. KRKeith Rabois1:03:02

        Well, I'm optimistic, I just don't believe there's a lot of great startups to invest in as a VC. Those are two different things. Like generally you have to be a technology optimist, as you know, Mark and Jason pointed out, to be a successful investor. You always have to meet a founder and say, "What can go right?" Like, "What is the potential of this company, and what is the potential of this person?" But I think there's gonna be rare examples of when things can go right on a probabilistic basis.

    16. HSHarry Stebbings1:03:29

        Mike, what's the best piece of advice you've been given in the Trava journey?

    17. MSMike Shebat1:03:32

        Uh, be unapologetic of what you stand for. It actually creates the right effects downstream.

    18. HSHarry Stebbings1:03:38

        Keith, final one for you. If you could change one thing about Founders Fund, what would it be?

    19. KRKeith Rabois1:03:43

        Um, I think we need to be younger and cultivate up-and-coming talent, uh, for investing, because it's a decades-long business. Peter's been around for a while, Bryan's been around for a while, Trey just turned 40. Um, so the problem is and the challenge is projecting who's likely to be a great investor is even harder than figuring out who's gonna be a world-class founder.

    20. HSHarry Stebbings1:04:12

        What are the bigger signs that someone is a great investor early? You d- we were talking about Deleon beforehand.

    21. KRKeith Rabois1:04:16

        You know, I think investing is a little bit like playing the guitar, and you can't really tell if someone can play the guitar until they pick up the guitar. And so you can't read a book about playing the guitar and know whether you can play the guitar or something. And so I think the only way to tell is you need to get some reps. You need to try to invest. You need to watch, can this person identify with taste? Who's a world-class founder? Can they close an interesting investment? Do those companies show signs of life? I've yet to find a really strong proxy for that, where I know how to find a world-class founder, I know how to evaluate a world-class founder. Directly, I usually know how to interview an executive, et cetera. Try to identify who's gonna be a world-class founder, so you see them actually try to do it is really, really, really difficult. And you don't get real returns for six, eight, ten years. Whereas, like, an executive, I always know in 30 days whether they're really gonna work.

    22. HSHarry Stebbings1:05:07

        Jeff at Insight said you need 10 to 20 million to learn at seed investing.

    23. KRKeith Rabois1:05:11

        Yeah, there's that famous fighter jet thing from John Doerr, about if you, like, you crash a j- uh, you know, an F-15, 50 million. Anil from, uh, Greylock used to talk about that. I don't know if you really need to lose that much money. I think a year in, you know what you have. Like, we knew Trava was working pretty damn quickly. Um, you know, Deleon knew Fair was working at the second board meeting. He pushed me on ramp even before launch to double down. So I actually think within 12 months, 90%, 99% of the time, you know whether you've made a good investment, even if the external world doesn't know.

    24. HSHarry Stebbings1:05:45

        Mike, final one for you. Where are you and where's Trava in 10 years time?

    25. MSMike Shebat1:05:50

        Well, Trava in 10 years time should be a trillion-dollar company. We will be working towards that goal, so we'll be public, 'cause I do believe in going public soon rather than lagging. You look at Amazon, Apple, Tesla, they're all public. Um, so we'll be a publicly traded company, uh, and working towards that trillion-dollar goal we have. We have improved millions and millions of people's lives, upskilling them, connecting them to the right jobs at the right time, and we've unlocked a new level of productivity in the supply chain. So people are getting food faster, at a better price, while the, uh, buildings are getting put up with a better cost, um, getting put up faster. There's not this constraint of labor across the supply chain.

    26. HSHarry Stebbings1:06:30

        Guys, I've loved doing this. Uh, uh, this is why I didn't really like the schedule, 'cause I thought the conversation was so much better without it. Um, thank you both so much for joining me, and this has been fantastic.

    27. KRKeith Rabois1:06:40

        Absolute pleasure to be with you.

    28. MSMike Shebat1:06:42

        Yeah, thanks for having us.

Episode duration: 1:06:43