Sam Corcos: Why Founders Should Take as Many VC Meetings as Possible | E1093

1. 0:00 – 0:46

   Intro

   1. HSHarry Stebbings0:00

      Do you agree with Vinod Khosla that 90% of VCs actually detract value?

   2. SCSam Corcos0:04

      It's a little bit challenging because when you're fundraising, you're a prophet, not a missionary. You have the vision and you're trying to get people who already get it. You're not trying to convert people to your religion. I think one of the major mistakes that people make early on is they treat investor contacts like precious gems. The reality is that-

   3. HSHarry Stebbings0:23

      What was the best first investor meeting that you had?

   4. SCSam Corcos0:27

      I think the best we had was with-

   5. HSHarry Stebbings0:33

      Sam, I am so excited for this. I was just running on the treadmill. I was listening to you and Tim Ferriss, and it was the worst episode to listen to running on a treadmill because I was constantly typing notes, which is a great sign. But thank you so much for joining me

2. 0:46 – 1:23

   Early Passions and Formative Experiences

   1. HSHarry Stebbings0:46

      first.

   2. SCSam Corcos0:46

      Glad to be here.

   3. HSHarry Stebbings0:47

      Now, I would love to start with a little bit of background. I always find actually what people wanted to be when they were younger very informative. When you were a child, what did you want to be when you grew up?

   4. SCSam Corcos0:57

      My first real memory was I wanted to be a scientist. I was fascinated by biology and oncology, so I think it was a research scientist.

   5. HSHarry Stebbings1:05

      (laughs) Well, you know, there's still time. There's always a second chapter, Sam.

   6. SCSam Corcos1:11

      Yeah. (laughs)

   7. HSHarry Stebbings1:12

      Um, were your parents pushing you to be a doctor? You're not an Asian child and so I don't think they were like beating you to either be an engineer or a doctor. (laughs)

   8. SCSam Corcos1:19

      Yeah, well, I- I do have Jewish parents, so doctor or lawyer were the- the default two

3. 1:23 – 4:05

   Resilience Lessons from Overcoming Homelessness

   1. SCSam Corcos1:23

      choices. (laughs)

   2. HSHarry Stebbings1:24

      I- I- I've learned, you know what? We can only, uh, we can only disappoint parents. Um, but I wanna start with a story that Vinay at, uh, Loom told me.

   3. SCSam Corcos1:33

      Uh-huh.

   4. HSHarry Stebbings1:33

      And he said that, uh, he encountered you one day in the street when you weren't with a home base, we should say. And, uh, you asked him if you could stay the night.

   5. SCSam Corcos1:42

      Yeah. (laughs)

   6. HSHarry Stebbings1:42

      Can you talk about that story, Sam?

   7. SCSam Corcos1:45

      Yeah. I- it's, uh, from the perspective of Tom, who was, uh, on our growth team. I had just landed in New York to spend some time with him and other people, and he asked me where I was staying, and I said, "I don't know. That's a, that's a, like, multiple hours from now problem." And he said, "Well, what- what do you think is gonna happen? Like what normally happens in these situations?" And I said, "You know, I'll run into a friend and then I can stay with them. Worst case, I get a hotel." And then about 30 minutes later, I bumped into Vinay walking through Washington Square Park. He mentioned he had just arrived. He had an extra bedroom in his Airbnb. I asked him if I could stay there, and that was it. And Tom, I think, is absolutely convinced that I staged that whole situation. (laughs)

   8. HSHarry Stebbings2:29

      (laughs)

   9. SCSam Corcos2:30

      But it always happens that way. I'm- I'm convinced that the universe is conspiring in my favor. These things just happen all the time.

   10. HSHarry Stebbings2:36

       Listen, after Loom's acquisition, Vinay is now officially the world's most highly paid actor in that situation. (laughs)

   11. SCSam Corcos2:43

       Yeah, totally. (laughs)

   12. HSHarry Stebbings2:45

       Um, listen, I- I do want to ask, though, 'cause, you know, being without a home base, it does, I'm sure, shape a lot of mindset. How did it inform your mindset in terms of not having that home base and being a lot more fluid in terms of movement and transportation?

   13. SCSam Corcos2:58

       I think the biggest thing that it teaches you is that things are gonna work out okay. People often over-plan things, and if you go with the flow and you make room for spontaneity, really interesting things can happen. There's, uh, there's a whole practice of just saying yes to more things and just allowing events to unfold in whatever direction they're gonna go and just being comfortable with that. So I think being- being more mobile really enabled that.

   14. HSHarry Stebbings3:24

       Can I ask you then, why do we plan? Is it because we have to? Because we have a boss to report to?

   15. SCSam Corcos3:30

       (laughs) I think most people plan because the ambiguity of not knowing what's coming is stressful. And I think I was probably in a very similar situation in a prior life where you plan every step. It's like, well, you know, when we- if we're going on vacation to Paris, we need to make sure that we have planned what we're gonna do every day. Otherwise, there will be nothing to do. But the reality is, people do things there already. Like, there are- there are interesting spontaneous things that can happen just going on a walk and just meeting new people. So I think being open to

4. 4:05 – 7:17

   Advantages of Unplanned Actions in Business

   1. SCSam Corcos4:05

      that is really the important part.

   2. HSHarry Stebbings4:06

      I'm just pushing back here. Th- this is where I love the show, 'cause it's just like me just going off schedule.

   3. SCSam Corcos4:12

      (laughs)

   4. HSHarry Stebbings4:12

      Um, you're- you're an optimizer in so many ways. You totally can go to Paris and have a beautiful time, but you won't have the optimized time of the right gallery on the right day, with the right guide, if you don't plan. Does it not go against your optimization frameworks and mind?

   5. SCSam Corcos4:29

      I think it depends on what you're optimizing for. I think that's the ultimate answer. If what you're optimizing for is to go to certain galleries, and the only way to do that is to plan three months in advance, then by all means, that is the optimal way to do it. If what you're optimizing for is interesting new experiences that you wouldn't have had otherwise or meeting new and interesting people, then it's actually really counterproductive to not allow space for that. When I was spending time in, uh, in Europe, I was in Estonia, and I made friends with some random people that were just at a bar, and I ended up going on a road trip with them for several days through like Serbia, Croatia, and like slept on their couch. That would not have been a thing that I would have had the capacity to do if I was super fixated on what plan I had already.

   6. HSHarry Stebbings5:19

      Can I ask, has your flexibility of mind ever got you in trouble? Your spontaneous nature ever led you to, you know, a precarious situation? I'm just intrigued.

   7. SCSam Corcos5:30

      It's led me to some situations that I thought at the time were precarious, but it turns out most of these risks are severely overblown. Uh, a lot of this depends on one's situation, but the risk of things, like, this is a real statistic. Say if you have a child, the odds that your child is kidnapped by a stranger is about the same as them getting struck by lightning. Like that- that is how rare these things actually occur. And so things like hitchhiking. Hitchhiking is actually not dangerous.... just as a probabilistic thing. But people think that it is because we've all, like, seen the serial killers who pick up hitchhikers and it's like, it ingrained in our memories and so we, we apply that model to everything else in the world when it really ... Ultimately, the news is poison and it makes you view a, it gives you a perception of the world that is not real.

   8. HSHarry Stebbings6:24

      Would you like to sit on my sofa? (laughs)

   9. SCSam Corcos6:28

      (laughs)

   10. HSHarry Stebbings6:28

       Hitchhiking might not be, but that sofa looks incredibly dodgy, doesn't it? (laughs)

   11. SCSam Corcos6:33

       (laughs)

   12. HSHarry Stebbings6:34

       Would you say that you're, r- like incredibly risk willing person? I'm always fascinated by attitudes to risk and whether yours has stayed the same over time.

   13. SCSam Corcos6:43

       I would say it's definitely increased over time, um-

   14. HSHarry Stebbings6:46

       It's increased? You're willing to take more risks today?

   15. SCSam Corcos6:49

       Yeah. I think I've always been a fairly risk tolerant person, and over time as I've realized how many things feel risky or appear risky on paper are actually not as risky as people think they are. Like starting a company feels risky, but really what's the worst that can happen? Like, it doesn't work and you feel like mildly embarrassed? It's actually ... The downside situation is not the worst thing that can happen. There are many, many worse things

5. 7:17 – 8:07

   Evolution of Risk-Taking with Time

   1. SCSam Corcos7:17

      in the world.

   2. HSHarry Stebbings7:17

      There is. But I'm, I'm always intrigued though on that one because, like, I meet founders who are more risk averse with time because they take on more cash, they have more employees, they have more customers. And so the weight of expectation really rests on their shoulders a lot more so than when you're no one.

   3. SCSam Corcos7:33

      Yeah, for sure. People, w- when you have something to lose, it, it is this, it, it really is straight from the book, The Innovator's Dilemma, which is the more success you have, in theory you should be able to take much larger risks because you have huge amounts of cash, you can take these moonshot bets but people tend not to for some reason, and this is just a thing that we've seen throughout all of history. The more reputation you have, the more afraid you are of failure. Which is ironic because it should be the opposite, but this is, this seems to be just a, a default state

6. 8:07 – 9:13

   Recognizing the Role of Luck in Success

   1. SCSam Corcos8:07

      of human nature.

   2. HSHarry Stebbings8:08

      How important do you think luck is, Sam?

   3. SCSam Corcos8:10

      I think it would depend a lot on one's definition of luck. I don't remember whose quote it was. Maybe ... I think it might have been Vince Lombardi, he said that luck is when preparation meets opportunity. And so I think in some ways you can create your own luck, but there is definitely a degree of just probability in the whole thing, so luck plays a significant role. But if you're not prepared to recognize an opportunity when it comes up or you're not prepared for it, you're not taking full advantage of the luck that's made it your way.

   4. HSHarry Stebbings8:38

      No, I, I totally agree with you. Sahil Bloom actually did an amazing tweet on the four different types of luck and I, I thought it was actually a brilliant framing.

   5. SCSam Corcos8:45

      Hmm. Interesting.

   6. HSHarry Stebbings8:45

      I'll send it to you afterwards, it's really fucking good.

   7. SCSam Corcos8:47

      Yeah.

   8. HSHarry Stebbings8:47

      Because I hate the generalized, "Oh, luck is what makes it up," it's like fuck that, I was in the gym training every day for the last four years.

   9. SCSam Corcos8:54

      Yeah, exactly. (laughs)

   10. HSHarry Stebbings8:54

       Anyway, uh, you mentioned that like what happens, you know, when a company maybe doesn't work out and we overemphasize how bad that might be. I really only like to invest in serial entrepreneurs, Sam, because I think you do so many stupid things the first time around, and I want to talk about the stupid things you did first time around. (laughs) What are the biggest lessons from your prior

7. 9:13 – 12:12

   Gleaning Insights from Previous Ventures

   1. HSHarry Stebbings9:13

      companies that impacted how you build Levels? That one was from Vinay, to give credit.

   2. SCSam Corcos9:18

      After previous companies I usually spend some time reflecting and writing on what the big lessons learned were. I would say from my last company, Cardash, one of the biggest lessons that I learned was, I would say it was the first time ... You, you sure you're familiar with the Dunning-Kruger curve of, of-

   3. HSHarry Stebbings9:33

      I am but, but, but for those that aren't maybe listening can you explain it?

   4. SCSam Corcos9:37

      Yeah. So the idea of th- the Dunning-Kruger curve is on the f- it's a U-shaped curve on the far left, on the, the X axis is, uh, how much you know, and on the Y axis is how confident you are that you know it. And so if you know very little, you tend to be very confident in how much you know. (laughs) If you know a little bit, you realize how little you know, and then at some point you actually become an expert. And, uh, I would say during my last company, and this may be ties into your hypothesis on this, is it was the first moment when I realized that I had maybe bottomed out when it comes to things like software development, that maybe my opinions are actually valid and I don't need to just defer always to the loudest person in the room because it was a regular occurrence that we had a loud person in the room who said, "We should do it this way," and I said, "Well ... " and he seems to have very strong opinions on this so we'll go with that. And then six months later it's like, "I knew it, this is a huge problem, now we have to fix this and it's my fault." So I would say that was the first moment when I realized that I actually have some valid opinions. Another really big reflection, and this was something that I recognized while I was at the company, not just in retrospect, was I, I had really failed at an important value around ownership. There was a specific moment when I was, uh, Yanan, who is our CEO, I was the technical co-founder, CTO, he and I had a disagreement about the path forward and I, I was unable to fully get behind it, to disagree and commit, and so when people would ask me, "What do you think about this idea?" I would say, "Well, you should ask Yanan," or like, "Yanan thinks that we should do this." And I wouldn't say like, "I'm on board with this, this is what we are doing," it was more like, "This is what he wants to do." And he actually called me out on it, which I, I really appreciate. He pulled me aside, we went on a walk and he was like, "You can't do that, we have to be on the same team and if you're not, that's a huge problem." And so that was a big reflection, was just realizing that there's a point at which, you know, you can disagree behind closed doors but once the path is defined, which is defined by the CEO, you've got to get behind it or you've got to leave, frankly. Like if you can't get behind the idea and you can't get behind the path forward you should probably leave the company.

   5. HSHarry Stebbings12:01

      Can I ask you bluntly, I don't agree with disagree and commit if you're a co-founding pa- I just think it's too diff- on large strategic things. I think it's too difficult if you disagree to

8. 12:12 – 12:38

   Decision-Making: Staying or Leaving a Company

   1. HSHarry Stebbings12:12

      commit fully, to commit to do at 1:00 AM, to miss your friend's birthday, to miss ... if you don't agree with it.

   2. SCSam Corcos12:19

      I think the answer is then you have to leave.I think that's the answer. Like, a, starting a company is not a suicide pact and you're not committed for the rest of your life. If ultimately you cannot get behind the idea then you have lost confidence in the CEO of the company, and ultimately, you're probably better off working

9. 12:38 – 13:41

   Journey from Technical Co-Founder to CEO

   1. SCSam Corcos12:38

      somewhere else.

   2. HSHarry Stebbings12:38

      What was the hardest thing about moving from technical co-founder to CEO?

   3. SCSam Corcos12:42

      I, I'd say probably the hard part was the lack of clear feedback loops and deliverables. That was one of the strangest things, was when you're a software developer, especially if you're a good one, you're shipping a lot and you can see the immediate impact of what you're shipping. You see people using it, you get feedback, you iterate on it, you improve it. There's just this constant delivery pipeline. When you're the CEO you have a... You have a 1% impact on everything, but you have almost nothing that you can actually point to as your own work product. I was reflecting on this with my co-founder Josh when we were talking about... We did a podcast on founder dynamics that was a really interesting one, but really it was from Josh's perspective more than mine. Just having this recognition that we have our Friday forum where we celebrate all of our wins, and I very rarely make an appearance as a person who has an attributable win. And so just realizing that my role is

10. 13:41 – 14:55

    Celebrating Success in Business

    1. SCSam Corcos13:41

       just not that anymore.

    2. HSHarry Stebbings13:42

       Why do you do that cool, if you don't mind me asking?

    3. SCSam Corcos13:44

       (laughs)

    4. HSHarry Stebbings13:45

       I, I find wins quite uncomfortable, I don't want everyone to get complacent, um, we haven't won shit, we're still behind other people in media, in funds. Why do you do it and what would you advise founders around that? Advise me.

    5. SCSam Corcos13:58

       Yeah. I, I think it is incredibly important for team morale to see forward progress. If you only feel like you're failing and losing all the time, people will get demoralized. Winning is an intoxicant in terms of morale. And if you see forward progress, people get really inspired and motivated to push even harder. But if it feels like you're just failing and losing all the time, it gets really demotivating.

    6. HSHarry Stebbings14:23

       I agree with you on the forward progress. I tweeted recently that little and often is my secret to retaining great talent, and what I mean by that is you have title and salary and I increase them separately but little and often to create that-

    7. SCSam Corcos14:35

       Yeah.

    8. HSHarry Stebbings14:35

       ... kind of feeling of forward momentum more frequently. Do you have any lessons on what it takes to retain the real best, like I said there? Are there any for you?

    9. SCSam Corcos14:45

       Th- this is maybe a slight tangent but we, we've done away with titles beyond just... Yeah, beyond just functional definitions like engineering,

11. 14:55 – 20:35

    Building a Culture of Transparency and Trust

    1. SCSam Corcos14:55

       product, ops.

    2. HSHarry Stebbings14:56

       Wh- wh- why did you do away with titles, Sam?

    3. SCSam Corcos14:59

       This came from a conversation we had with Darren Murph from GitLab, and they have a different philosophy on this but he had a statement that really caused me to rethink this whole concept of title. So we're an incredibly transparent company. We post all of our investor updates publicly online, all of our team all-hands are publicly posted online. Remains to be seen whether or not this is a good idea but it's something that we're trying. One of the things that he said is that, uh, titles are a form of compensation. We share basically everything, including all of our one-on-ones and team meetings are all shared within the company, so you can see all of the one-on-ones between every other person at the company. Performance is shared within the pump- within the company so you can see who is not meeting expectations right now, who is, who's delivering a lot of value. The only thing that we don't share is compensation data, and so-

    4. HSHarry Stebbings15:56

       Oh, can I, can I just dig in-

    5. SCSam Corcos15:57

       Yeah.

    6. HSHarry Stebbings15:57

       ... sorry on that, it's too, too interesting. I think people are their best selves and can truly be honest when they feel safe. If me and you have a one-on-one, I don't feel safe if it's transparent. I can't be vulnerable in many ways.

    7. SCSam Corcos16:10

       Yeah. It's, it's... So I would say one note is that it's shared by default, but again, this is not a suicide pact. So if you say something that you don't want shared to the rest of the company, you don't have to share it. You just say, "I don't want this one shared," and then it doesn't get shared. And so there are certain personal things that people don't want shared and that's totally okay, but there is definitely some degree of vulnerability that is required to be comfortable with the people that you work with. It, it can really only be done in a place that has very high trust.

    8. HSHarry Stebbings16:40

       And then, sorry, I'm strawman-ing here. I think that was the term. Uh, if it's not I like it. (laughs)

    9. SCSam Corcos16:44

       (laughs)

    10. HSHarry Stebbings16:44

        Um, uh, and then performance. If someone's not doing well, it can then lead to other people losing faith, and if that's very visible, they don't need their teams to turn against them in real time as well, they know that they're not doing well. If they're really bad, their teams will reject them like organ rejection. But does it not create teams turning against people potentially prematurely?

    11. SCSam Corcos17:08

        So I think the answer is it depends a lot on what sort of team you've built. And so if you have built a team with very high trust... I can tell you how this happens in practice where we, we use the, uh, uh, a, a common heuristic that we use is the keeper test from Netflix, which is you often do this role-playing with the manager and you say, "Close your eyes." Imagine you have somebody named Mike on your team, right? And you really... Or just even imagine a specific person on your team that you have questions about, and imagine I'm that person and I come up to you and I said, "Harry, I have some bad news. I've decided that I, I'm not happy here and I'm, I've just accepted a job at Google." And then the question is, how do you feel right now? And if the quest- if the answer is relief or, like, excitement, that's a very bad sign. You should feel very concerned of, like, what did we do wrong to lose this person? You, you should fight really hard to keep this person. If you never... If you feel anything other than that, it's a problem and you should probably consider letting that person go.

    12. HSHarry Stebbings18:13

        So if you're not sure, that's the s- as bad as, like...

    13. SCSam Corcos18:18

        Yeah. If you're not sure, that's a bad sign, and we tell them directly. I had a one-on-one two weeks ago...... where I said to somebody on our team, I said, "I did the keeper test exercise. Right now, you do not pass the keeper test. If you were to leave, I would feel kind of indifferent. And neither of us want that to be the case, so we need to figure out how to get you to the point where I am excited for you to be here and where I'm confident that you're contributing value." And that meeting is shared within the entire organization. And I can tell you, in practice, there's the, like, worst-case scenario fear of, like, everyone's gonna turn against them and, like, there's gonna be all this politicking and backstabbing. The reality is what happened is people saw the video and several people said, "Hey, Sam, you might not know, but he's been helping me on these projects and he's been a huge contributor." And then other people said, "Hey, I can help. I can help mentor him to develop these skills that are gonna be really important to get him to the point where he's able to contribute in a really positive way." So in a high-trust culture where people are supporting each other, usually the opposite happens. If you, if you've built the right culture, people support each other. And I would also say that one of the other notes that you had of people know who the low performers are, they actually very often don't. The people who work directly with them, maybe, like, the two or three people who are closest to them know, but everyone else at the company, if they end up leaving, it's a complete mystery why they left. If you have an engineer depart, somebody in operations had no idea that this person was a low performer. They don't even know what it would mean to be a low performer because it's not in their industry. They're- they- they haven't had any exposure to that vertical. So having these things out in the open, it both enables people to be much more supportive and positive, but also, I would say, increases trust and transparency across the company.

    14. HSHarry Stebbings20:10

        Can I ask you, uh, how big is Levels today, people-wise?

    15. SCSam Corcos20:14

        We're about 50 people.

    16. HSHarry Stebbings20:16

        Okay. And everyone passes the keeper test?

    17. SCSam Corcos20:19

        Yeah.

    18. HSHarry Stebbings20:19

        When does quality begin to degrade? And I- I always... And maybe you can ar- argue with me here. It- I love a good debate.

    19. SCSam Corcos20:25

        Yeah.

    20. HSHarry Stebbings20:25

        It's the end of the day. It's dark.

    21. SCSam Corcos20:27

        (laughs)

    22. HSHarry Stebbings20:27

        Let's go. Um, but, uh, the- the present for your little one's coming, so you can, you know, forgive me after this. Um, but,

12. 20:35 – 27:07

    Managing Quality and Rebuilding Trust

    1. HSHarry Stebbings20:35

       uh, my- my question is, like, at some scale, you cannot only have A players. 500, 1,000, 200, whatever that is, the definition of an A player, by definition, is a bit rarer. Um, when does quality begin to degrade do you think, and how do you think about that looking forward?

    2. SCSam Corcos20:51

       It's interesting to think that, like, the keeper test is something that we got from Netflix, which is a much larger company. And I'm sure they developed that heuristic at some point beyond our current scale. I think in many ways, there's also a U-shape to this, where in the very early days, sometimes you just hire the best person that you can get because you don't have a lot of choices.

    3. HSHarry Stebbings21:12

       Mm-hmm.

    4. SCSam Corcos21:13

       And then over time, as you see some amount of traction, you can attract really incredibly exceptional talent. And then at some point, it does appear that the talent bar decreases. And I think some of it is just that you end up hiring effectively commodity roles where you're just like, "We need 100 engineers," as opposed to, like, "We need this specific person."

    5. HSHarry Stebbings21:34

       I totally get you around that kind of commodification of role, you see it especially in particularly sales and marketing, with no disrespect there.

    6. SCSam Corcos21:40

       No.

    7. HSHarry Stebbings21:41

       But I do want to ask, you mentioned trust also quite a few times. Can trust be regained once lost in teams? Or is once trust gone, it's- it's gone?

    8. SCSam Corcos21:50

       I would say it... The answer of can, the answer is yes. Is it likely? No. (laughs) I can give you a good example of how we rebuilt trust for a lot of these things. So in the early days when... We've had two cycles of transparency. The first one was sharing a lot more information publicly, sharing a lot more information within the team. This would have been in 2020. And, uh, the two exceptions that we made were compensation and individual performance. So we kept those two secret. So one-on-ones were secret. Uh, if somebody was failing, it was secret. And when somebody would depart, they would write their own definition of why they were leaving, like leaving for personal reasons, leaving for whatever else. It actually created a tremendous amount of distrust within the organization. People would, people would be very skeptical of like, "Wait, why is so-and-so leaving?" And they just didn't have enough information. It created a lot of distrust of our team and our culture by not being transparent about it. And then a couple years later, we had this next cycle where we just increased transparency even more. One-on-ones are now shared. Our performance reviews are all shared. And, like, the- the risk that you run when all these things are shared is if you have a culture where everyone is political and nobody trusts each other, it's all gonna fall apart. But the nice thing about companies, as opposed to things like countries, is you get to choose who's at your company.

    9. HSHarry Stebbings23:22

       (smacks lips)

    10. SCSam Corcos23:22

        And if you see a performance review and you're like, "This person is politicking," you can fire them. And you can just choose to only have people who operate in good faith and who follow the system that you've put in place.

    11. HSHarry Stebbings23:33

        I totally agree with you. A- a- and, like, family, sadly, you can't fire them (laughs) , despite many attempts on my behalf.

    12. SCSam Corcos23:42

        (laughs)

    13. HSHarry Stebbings23:42

        (laughs) I'm lucky they don't listen. Um, no, but my...

    14. SCSam Corcos23:44

        (laughs)

    15. HSHarry Stebbings23:45

        A perfect kind of tangent that kind of takes us to the next topic, but you mentioned that kind of the transparency around everything. I have another disagreement, but I- you're convincing me slowly. But fundraising transparency-

    16. SCSam Corcos23:56

        Yeah.

    17. HSHarry Stebbings23:56

        ... is a real challenge for me because teams get caught up in it. "Oh, we're gonna raise a round." And then if it takes longer, if it doesn't happen, it can create real morale challenges. How do you think about transparency on fundraisers and the challenges associated?

    18. SCSam Corcos24:11

        If you've built up enough social capital internally, think of it like you've built up the trust bank with enough of a- enough credibility that people know that you're not lying to them, then it's totally fine and it's never been an issue. If people get the sense that you're gaslighting them because you're selectively sharing information...... that's when you run into real problems. It depends a lot on the type of culture that you've built. If it's the type of culture where you're just, you don't share anything, and you just say, "Keep out of it," this was really something that was aggressively pushed by somebody early on at Levels, where they were at a company that seemed to be doing extremely well on paper. But they never shared financials. They never shared anything. And then one day, the company just died, and the CEO just announced like, "Yep, we ran out of money. Everyone's fired." (laughs) And he said, "I don't want to repeat that experience. People should know the financial state of the company. People should understand what's going on because people can contribute to these things." I always try to look at what is the best thing that can happen rather than... I, I would, I would reframe maybe something to think about for these things is like instead of thinking if everyone at the company is super political and wants the worst for the company and only what's best for them, if you have a bunch of difficult people who are gonna make your company building really hard, if you only have those people, what could happen? Versus if everyone at the company wants what's best for the company and for everyone else here, what's the best thing that could happen? And what you often find is that the best outcome is the one that actually happens if you have the right people.

    19. HSHarry Stebbings25:49

        I, I, I totally agree with you there in terms of if you have the right people. I think getting the right people is sometimes a challenge as, as we discussed-

    20. SCSam Corcos25:55

        Yeah, of course.

    21. HSHarry Stebbings25:55

        ... and retaining them even harder. On the fundraise itself, you took a very kind of strategic and deliberate approach to it. And I do want to dive into this because I heard about it from so many, from your Nivs and your Moshe's of the world to Vinay's. And so I just want to ask first, how did you approach the fundraise? What worked and what didn't? 'Cause we met in your fundraise, didn't we?

    22. SCSam Corcos26:16

        Mm-hmm. We did.

    23. HSHarry Stebbings26:17

        Yeah. I, I have to admit, ah, it was a bit of a fucking mistake, wasn't it? (laughs)

    24. SCSam Corcos26:22

        (laughs)

    25. HSHarry Stebbings26:25

        Some things you keep in and some you take out.

    26. SCSam Corcos26:28

        Uh-huh.

    27. HSHarry Stebbings26:28

        I'm actually happy for that to stay. (laughs)

    28. SCSam Corcos26:30

        Yeah. (laughs)

    29. HSHarry Stebbings26:32

        Uh, by the way, I loved you. I just worried that churn is real. (laughs)

    30. SCSam Corcos26:36

        Oh, yeah. I mean, uh, churn is still very high. It's like, uh, 25%. We have 25% retention, which is not what it needs to be for this to work in the long term. So we've got a lot to figure out.
13. 27:07 – 30:38

    Pattern Formation for Recurring Success

    1. SCSam Corcos27:07

       out how to get there.

    2. HSHarry Stebbings27:08

       So how do you create ongoing... Is that before we do fundraising? I'm just interested. Like with, with like Levels, you know, once you know your kind of patterns, X is good for me, Y is bad for me, it's like a bit like Aura. You hear Aura have a lot of problems in terms of like-

    3. SCSam Corcos27:20

       For sure.

    4. HSHarry Stebbings27:20

       ... I know drinking is bad for me, da, da, da.

    5. SCSam Corcos27:22

       Yeah.

    6. HSHarry Stebbings27:22

       How do you create recurring patterns when we are quite predictable humans?

    7. SCSam Corcos27:28

       That is, that is definitely the core challenge of the product that we've got to figure out. I think some of it is around accountability and goal setting. The people who stay the longest, they value the accountability of the tool more than they value the discrete learnings of each step.

    8. HSHarry Stebbings27:46

       Mm.

    9. SCSam Corcos27:46

       So we'll use the Aura example. If you value keeping you accountable to getting to bed on time and getting good quality sleep more than you value learning that alcohol is bad, then you will tend to stay retained for longer.

    10. HSHarry Stebbings28:01

        I think, uh, like disincentives are not used enough. Too many things about like, "Oh, I'll give you $10 if you go to the gym or if you have your rate below X." Actually, people will respond much, much more actively to losing $10-

    11. SCSam Corcos28:15

        Yeah, for sure.

    12. HSHarry Stebbings28:15

        ... than gaining it. Connect your Chase or Wells Fargo account, and if you don't do these three things that you said, we'll take $20.

    13. SCSam Corcos28:24

        Yep.

    14. HSHarry Stebbings28:24

        And you can then put it in a pot to X charities. I just think there's something to be had around disincentives and turning it into a financial play as well.

    15. SCSam Corcos28:33

        Yeah, we've done something in the range of about 15 different, 15 cohorts with, uh, the Wearable Challenge, which we've been doing with Justin Mares-

    16. HSHarry Stebbings28:42

        Cool.

    17. SCSam Corcos28:43

        ... where you commit some amount of cash upfront, and then every time you miss your goal, you lose some amount of money from it.

    18. HSHarry Stebbings28:50

        Yeah.

    19. SCSam Corcos28:50

        So-

    20. HSHarry Stebbings28:50

        Yeah.

    21. SCSam Corcos28:51

        Yeah. It has, it has been pretty effective.

    22. HSHarry Stebbings28:54

        Well, fine. Already got it.

    23. SCSam Corcos28:56

        Yeah. (laughs)

    24. HSHarry Stebbings28:57

        Okay. No need to show off. Um-

    25. SCSam Corcos28:59

        (laughs)

    26. HSHarry Stebbings29:00

        No, okay, but on the fundraise itself-

    27. SCSam Corcos29:01

        Yeah.

    28. HSHarry Stebbings29:01

        Like, uh, talk to me. How did you approach it and what worked and what didn't?

    29. SCSam Corcos29:05

        The things that worked, we, we approached it by casting a very wide net. We spoke to a lot of people. I think one of the major mistakes that people make early on is they treat investor contacts like precious gems.

    30. HSHarry Stebbings29:17

        Mm.
14. 30:38 – 37:23

    Strategy for Effective Fundraising Meetings

    1. HSHarry Stebbings30:38

       firm there. Often, we hear, you know, when you're going out to start a raise, uh, "Go to the third-tier firms first 'cause you wanna kind of kiss a couple of frogs before you meet the prince." Do you agree with that, or do you think this is too much of a gamified approach of fundraising?

    2. SCSam Corcos30:52

       I think you should take as many meetings and do as many pitches as you can. The feedback that you'll get from really good investors tends to be really positive. Like, y- you will learn from people who have way more exposure to your market category than you do. I cannot even count the number of people who they, the number of first-time founders who have this, what they think is this incredible idea, and then they get to their first investor pitch, and they say, "Yeah, you know, it sounds like these five companies that we passed on. Why are you different than them?" And they go, "What five companies?" (laughs) And then-

    3. HSHarry Stebbings31:26

       Do you not think that's a poor-quality founder? I mean, if you don't know your market ... Like, if you were to ask me about fund or media competition, I could tell you every one, break them down by pros and ... Like, that's just a bad founder. Sorry.

    4. SCSam Corcos31:38

       I would say an inexperienced founder maybe more than anything. But the reality is that VCs or investors broadly just have way more exposure than a founder does. If you're a founder and you're working on your one company for five years, you don't know what's going on outside of your company. You don't have the capacity. You're not getting pitched new ideas five times a day for five years. So you have way less exposure to what's going on in the world. And so when you start working on whatever your next company is, you don't have the benefit of having been pitched a thousand times. And so you're necessarily limited.

    5. HSHarry Stebbings32:14

       What do you think about leads, most of the check going to a lead, versus a much more distributed round?

    6. SCSam Corcos32:20

       This is sort of a lazy answer, but the answer is that there are trade-offs, and you have to pick which trade-off works for you. There is more overhead. I knew that there would be a lot of things that we needed from our investors when we were really early, and that there was a tremendous amount of value that is untapped in all of these angels and operators. Before we had our first institutional capital, I think we had about a hundred angels and operators that were investors that we were able to tap pretty consistently for the first couple of years.

    7. HSHarry Stebbings32:47

       Okay, sorry, I, I, I have to. I, I've tweeted before about ... Uh, and I think you actually put it in one of your notes, which (laughs) gave my ego great pride.

    8. SCSam Corcos32:55

       (laughs)

    9. HSHarry Stebbings32:55

       Honestly, I read it, and I was like, "Oh, Sam. I knew I should have invested." (laughs)

    10. SCSam Corcos33:02

        (laughs)

    11. HSHarry Stebbings33:02

        Jesus Christ. Uh, anyway, um, my point being, like, I think that y- it's great to have these names, but very, very few actually extract the value that they want or need from them. How do you think about extracting that value from them in the most efficient way when you have a lot?

    12. SCSam Corcos33:18

        Probably the easiest place to start would be what doesn't work when you bring on investors, and what doesn't work is usually the default behavior of all founders. (laughs) So, this is what I would say d- which does not work, which is don't assume that your investors can read your mind. Don't assume that they have as much context on your business about what your business needs are as you do, because they spend maybe an hour a month thinking about your company, and you spend all day every day thinking about your company. I would say another thing that doesn't work is, uh, passively criticizing your investors for their lack of engagement if you haven't even bothered to make an effort to engage with them. It, it takes real proactive effort to be able to get the value that you wanna get. Yeah.

    13. HSHarry Stebbings34:06

        So I find that often founders don't know the value that I can provide. And what I mean by that is, like, say you have a sales pipeline, okay, or a partnerships pipeline maybe for you maybe. You don't know that I went to school with the, uh, CEO of GoPro-

    14. SCSam Corcos34:20

        Totally.

    15. HSHarry Stebbings34:21

        ... or that I am brother-in-law to the head of X.

    16. SCSam Corcos34:25

        Right.

    17. HSHarry Stebbings34:25

        And so how do you open-share what you need to 100 people in an effective way?

    18. SCSam Corcos34:32

        I guess we'll, we'll say on what, what does work, this is probably the simplest one, and it is where almost everybody fails, which is the first and most important thing is you need to know what you need. (laughs) If I say, "How can I help?" and you say, "Uh, I don't know," y- you've already failed. You need to have a list of things that your, you and your team need help with, because you'd be surprised at how often people can deliver. I think that's the first one, is just you have to know what it is your needs are.

    19. HSHarry Stebbings35:01

        And so you have a Google Sheet that you share at the bottom of an update saying, "This is what we need."

    20. SCSam Corcos35:05

        Yeah, in our, in our investor update, we have an Asks section of things that people on our team need or things that the company needs, and we very regularly get conversions from those from our just sort of the broad outreach to our investors. I would say the highest leverage ones tend to be more specific. I would say a, a well-written request to an investor is highly targeted, which is if you're sending too much noise and not enough signal as your requests, they'll eventually just get filtered out and ignored, so knowing who may be able to connect you with somebody or who may be able to convert on a request. I would say also try to keep it very specific and also time bounded. I always try to imagine myself in the investor's seat when I'm writing one of these. I try to imagine, "If I was to receive this, could I respond to it in one minute, or is this something where I now have to do a bunch of work to try to interpret what the request even means?" And I try to also be specific where it is ... It's interesting, the, the difference between saying, "Hey, we're hiring a designer. Let me know if you know any good designers." You tend to get, like, a 0% conversion rate from that. But if you say, "Hey, I'm looking to meet more designers. Can you connect me with the two best designers you've ever worked with?" People immediately think, "Oh, I know these two people. I'll connect you with them right now." And so the more specific you can get ... This ties into, uh, chunking bias, which is a, just a cognitive bias of how our brains work. If you can get something really concrete and easy to execute on, your conversion rate goes up a lot. I think we've had something like...... thr- more than 3,000 specific investor asks that I've sent people. And I think our conversion rate is maybe 50% from that group, but pretty high.

    21. HSHarry Stebbings36:57

        Is that good, do you think?

    22. SCSam Corcos36:58

        There are things that some people just aren't going to be able to deliver on, and that's okay. Guess from the exposure that I've had to other founders, that they probably send something in the range of five requests per year. And so something in the range of 1,500 conversions is probably a lot better than, than is average. So, (laughs) you know, the... in terms of what the hit rate is, it's maybe lower than average, but you end up getting

15. 37:23 – 44:19

    Sales Pipeline Management and Accountability

    1. SCSam Corcos37:23

       a lot more value from it.

    2. HSHarry Stebbings37:24

       I find that when it comes to, like, sales pipeline in particular, share a Google Sheet with the companies that you wanna speak to, the specific person within the company-

    3. SCSam Corcos37:31

       Yeah.

    4. HSHarry Stebbings37:31

       ... hyperli- hyperlink their LinkedIn so it's-

    5. SCSam Corcos37:33

       Totally.

    6. HSHarry Stebbings37:34

       ... super easy for me to go, "Oh, shit, actually I do know three people with him." And then also say like, "Hey, put your name alongside it, so that people know that you've got it and no one else does." And what you create then is this, like, social competition dynamic of like, "Oh my God, Sam's got a load of... L- geez, Sam is really good, huh?"

    7. SCSam Corcos37:53

       Yeah.

    8. HSHarry Stebbings37:53

       And then when I'm another investor, I go on that sheet and I'm like, "Shit, I should bring Sam into more rounds 'cause he fucking works for his company."

    9. SCSam Corcos37:58

       Yeah, yeah.

    10. HSHarry Stebbings37:59

        How do you create that accountability dynamic within ValueAdd?

    11. SCSam Corcos38:03

        Even more work you can do is you can go into their each of their LinkedIns and find all of their mutual connections with anyone at this firm, and you can say, "We think these five people would be the best contact and you're one degree separated from them. Could you reach out to any of them and help us get one step closer?"

    12. HSHarry Stebbings38:21

        Hmm.

    13. SCSam Corcos38:21

        And so the more work that you're willing to do for them, the m- higher likelihood that they will be able to deliver on it.

    14. HSHarry Stebbings38:27

        Mm-hmm.

    15. SCSam Corcos38:27

        So, I think always have a clear understanding of what it is that you need as a company. Um, I would say another is, uh, setting clear expectations early is another one that I think people miss out on where they just take money from whoever is willing to give them money. But the reality is that not everyone is going to deliver value. If, if it is really an expectation of you that your investors will be engaged and respond to your emails and participate to some degree, you should set that as a clear expectation and say, "This is what we expect from our investors. If that's not you, totally okay, but this, this is probably not the right company."

    16. HSHarry Stebbings39:05

        Do you agree with Vinod Khosla that 90% of VCs actually detract value?

    17. SCSam Corcos39:10

        I'd have to think about it. I would say that it's a little bit challenging because we interact with mostly operators and angels, and so I'm not sure they even really qualify as VCs, and they've been super value additive. And the only real institutional capital that we have, we work with a16z, and they have this whole services model that's been incredibly high leverage.

    18. HSHarry Stebbings39:33

        Hmm.

    19. SCSam Corcos39:34

        I think, uh, we did an analysis where they have a tremendous number of operating partners. We did analysis, I think our team has extracted value from, I think, more than 110 of the operating partners from the Andreessen team, were pretty aggressive about finding ways to get value there.

    20. HSHarry Stebbings39:53

        Can I ask you, ValueAdd teams in venture platforms are actually pretty looked down upon, if we're being honest.

    21. SCSam Corcos39:59

        Yeah.

    22. HSHarry Stebbings40:00

        Do you think that's incredibly unfair? And why do you think that is, given the value that they're perf- providing to you?

    23. SCSam Corcos40:08

        I think part of the answer is that most firms are not good at it-

    24. HSHarry Stebbings40:13

        (laughs)

    25. SCSam Corcos40:13

        ... is sort of the short answer. I, I think most firms, they understand... When they talk to founders, they say that it's a thing that they want, but they're not very good at delivering on the value. Not a controversial statement to say that the a16z team is the best in the business at doing this.

    26. HSHarry Stebbings40:28

        Why, why is that? Is it the depth? Is it the breadth? Is it the... What is it that makes them so good?

    27. SCSam Corcos40:35

        I think a big part of it is, at least within the health and bio vertical, they have a, a BioHealthHub, which is a Notion doc that just has all of the services that they offer. And so they say, "If you need to do an executive comp study, we can help you with that. If you wanna put your general counsel on an email list with other general counsels in the category, add them to this list. If you want marketing leaders on a list, you can put them here." They have all of these services that are available to you that can prompt more discoverability on what they're able to do. First of all, they have a much larger operating team than other firms. But there are also some smaller firms that we've been able to get a ton of value from. So one is Trust Ventures. They're smaller and they're much more focused on regulatory. And so whenever we have a regulatory strategy question or something that's a little bit more nuanced and challenging, they've been incredibly valuable in thinking through these things.

    28. HSHarry Stebbings41:31

        What was the best first meeting you've had with an investor?

    29. SCSam Corcos41:34

        I would say there are quite a few. The ones that go well are the ones where I can tell they immediately understand what it is that we're going for. There's, uh... I don't remember who said this, but, uh, when you're fundraising, you're a prophet, not a missionary. You have the vision and you're trying to get people who already get it and are already bought in. You're not trying to convert people to your religion. It is an uphill battle when you're trying to explain to an investor and they just don't, they just don't believe that there's a market. Trying to convince them that there is, is an uphill battle. It's probably never gonna work and it's gonna be a lot of toil. And so finding the ones who they've already done the research. They're not, they're not taking this meeting as like a random thing of, "Oh, well, you know, I gotta fill up my 9:00 AM slot." They're taking it because they're already looking for a company in this category because they've done their homework and they get it. A- and this is, uh, an interesting thing is we share a lot of material in advance of these investor meetings. What's so fascinating is you would assume that the people who have the most time to read through these things are like the principals at the lower tier investors because they have, they have lots of time. The reality when we did our series A raise or our, our seed raise, we can tell because you can see in Notion who reads everything, the people who were most engaged was Mike Vernal at Sequoia and Jeff Jordan at Andreessen. They read every document.Jeff actually even fixed some typos, like, deep in, like, a 50-page document. Most of the other people, they would skim it or they wouldn't even bother reading it, and then they would come to the meeting and ask very basic questions that were all answered in all the material I already sent.

    30. HSHarry Stebbings43:06

        Okay, so I, I, interesting questions here. I say, actually, if it's like early, early meetings, don't send it ahead of time because generally investors look for reasons to say no. "Uh, you know, it's gonna be a retention problem. Uh, it's gonna be this." And they come in with a preconceived notion of, oh, it's healthcare, oh, it's consumer hardware. Let me just fucking sell you this pen. And I, I can bring you the energy that a slide deck can't do. Do you know what I mean?
16. 44:19 – 1:15:55

    Navigating Investment Meetings and Associate Relations

    1. HSHarry Stebbings44:19

       it. (laughs)

    2. SCSam Corcos44:20

       (laughs) Yeah, exactly.

    3. HSHarry Stebbings44:21

       No, I, look, I, I, I get you there. Should you speak to associates? It's the age-old thing of like, oh, only speak to partners.

    4. SCSam Corcos44:27

       I would like to believe that the answer is yes, you should. I, I have friends who are associates and principals at these firms, and, uh, I've tried to get a meeting with a partner through them, and I shared with the principal a whole bunch of information, and they got super excited. They shared it with the partner. The partner said no. And then, like, two weeks later, I meet with the partner, and they have no recollection that the principal shared any of this information with them. And so I don't know even what role they play within these firms, so I think it would depend a lot on the firm. So it's, it's not a knock on the principals. It seems to be more a knock on the industry and how principals and associates function within them.

    5. HSHarry Stebbings45:11

       I mean, generally speaking, uh, you know, being in the industry, there's kind of two functions or two types. One is, like, the research person who is just incredible depth and analysis, post-meeting, benchmarking, landscape analysis, you name it. And the other is outbound sales prospecting. We can't miss anything, be it all the drinks parties, be it all the events. Nothing gets missed.

    6. SCSam Corcos45:34

       Yeah.

    7. HSHarry Stebbings45:35

       Those are the two types that I find. Can I ask, on the operator side, uh, how did you approach minimum check? Sometimes people put in minimum check sizes. How do you feel-

    8. SCSam Corcos45:45

       Yeah.

    9. HSHarry Stebbings45:45

       ... about that, and what advice would you give, given Collecting The Best?

    10. SCSam Corcos45:48

        If there's one thing I would have done differently is I would have used a roll-up vehicle of some kind to just make the collection easier. Those weren't as common when we did our seed round. It was the round that had the larger number of people in it. Um, having a roll-up vehicle makes it much simpler when you need to get signatures and things like that. I think the, the reality is at some point, depending on the amount of money that you need to raise, there are only so many meetings that are worth the time. If you just do the math, say, if you want to raise a million dollars and you think you have X number of months to do it, you can work backwards from, based on whatever conversion rate you expect. If the minimum check size is $1,000, you're probably never gonna get there. If the minimum check size is 25,000, you can do the math and say, "Yeah, you know, if I take this number of meetings, we can deliver this round in that amount of time." If you're raising $20 million, taking even a $25,000 check is probably not gonna be a high leverage use of time because you need to raise so much more capital.

    11. HSHarry Stebbings46:53

        I agree. I just hate it when I see minimum check sizes and I'm like, you know what? The 5K check is proportionally incredibly valuable to that software engineer who's a genius when it comes to whatever that specific thing is. And so-

    12. SCSam Corcos47:06

        For sure.

    13. HSHarry Stebbings47:07

        ... do, do you know what I mean? Don't be too prescriptive, I find.

    14. SCSam Corcos47:09

        I, I think it depends a lot on what your intention is. If your goal is strictly to raise the amount of capital that you think that you need to raise, then it, it, there, the minimum check size is absolutely the most relevant thing in terms of, uh, valuing your time. But if your goal is to build an army of angels and operators, the minimum check size is much less relevant. And I think exactly to your point, when we did some analysis on who are most ROI positive investors were, one of the biggest categories was early employees at post-IPO companies.

    15. HSHarry Stebbings47:43

        Hmm.

    16. SCSam Corcos47:43

        And these are people who have some amount of capital that they want to deploy, but maybe, you know, $5,000, $10,000, but they also have a lot more capacity to help. And they also know more people that are on the front lines. They tend... If you need to hire somebody who's a really good designer, finding a design lead who is an early employee at a post-IPO company probably knows 10 or 20 really good designers, some of whom might even be looking for their next role. And so for a $5,000 slot in your cap table, you can get a tremendous amount of value from it, but it really only makes sense if you're able to extract value from it and make a process around it.

    17. HSHarry Stebbings48:21

        Sam, I, you're Mr. Transparent. Um, if, if my question is not followed by a name, it is political.

    18. SCSam Corcos48:30

        (laughs)

    19. HSHarry Stebbings48:30

        What was the best first investor meeting that you had?

    20. SCSam Corcos48:36

        I think the best first investor meeting that we had was with Moshe Lifschutz.

    21. HSHarry Stebbings48:40

        Wow, okay, why?

    22. SCSam Corcos48:41

        And I think, I think the reason was that he immediately understood the value of what we were doing, and I think it, it unlocked some of the theater and salesmanship that we ended up using in all of our following pitches. This was the first pitch where Josh, my co-founder...... at the start of the meeting, drank a green juice that was called Health Drink on the, on the cart. And halfway into the meeting, he just showed his glucose numbers and showed it just rocketing up during the meeting. And you could just see it in the eyes of Moshe and the other people in the room, like, "This is amazing. I need, I want to get one of these." And they totally understood the value proposition. So some of those early meetings, I think one of the other things is you've got to try lots of different things when you do these investor pitches. If you only have one deck with one pitch, you're doing it wrong. You've got to try different avenues of attack. You've got to try different language. You've got to try different pitches to determine which of these work, and eventually you narrow in on, like, these three talking points always work, and then you get really good at it.

    23. HSHarry Stebbings49:51

        How important is theater? Like you said, that kind of the exhibition of it. It's a performance in some ways.

    24. SCSam Corcos49:57

        Totally.

    25. HSHarry Stebbings49:57

        How important is that versus no, no, no, natural and discu- discursive conversational?

    26. SCSam Corcos50:03

        I think it's going to depend a lot on the type of business that you are and what stage that you're in.

    27. HSHarry Stebbings50:07

        Yeah.

    28. SCSam Corcos50:07

        I think if you're trying to pitch a big vision for the future, theater is absolutely critical. If you're a B2B SaaS company with like very consistent growth numbers that's super boring, like all you really care about is CAC to LTV.

    29. HSHarry Stebbings50:22

        (laughs)

    30. SCSam Corcos50:22

        And that should just be your only slide, is like, "Here's our CAC to LTV and here's our growth rate, and we expect this to continue indefinitely."

Episode duration: 1:19:52