Zach Perret: Why ‘Founder Mode’ is the Most Dangerous Blog Post for Founders | E1215

1. 0:00 – 0:52

   Intro

   1. ZPZach Perret0:00

      I think it's gonna be one of the blog posts that is the most misused, and actually causes a lot of the worst behavior in startups for a long time. OKR is another one. OKRs were built for manufacturing. We don't manufacture software. I think that raising money is, like, a big waste of time, so we try to raise money as infrequently as we possibly can within Plaid. Angel investing, I think, is very distracting to founders.

   2. HSHarry Stebbings0:19

      Ready to go? Zach, I am so excited for this, dude. For me to do this in person is such a joy. Also the first time we've met in person, so thank you for joining me.

   3. ZPZach Perret0:38

      Thank you so much for having me. I'm a huge fan of the, the podcast and, uh, amazing how long you've been doing it, and how impressive all of the, uh, all the episodes are. And kudos to you as an amazing interviewer.

   4. HSHarry Stebbings0:48

      That is very, very kind of you. As I was saying, I, I did not start quite like this.

2. 0:52 – 5:53

   What Triggered Plaid’s Recent Growth

   1. HSHarry Stebbings0:52

      (laughs) Um, I would love to start though, on a little bit like the re-founding moment, because Plaid has had many iterations over, you know, the years. And in the last two to three years, it would seem like there's been like, a re-founding latest chapter. Can you just take me to that and how that's evolved?

   2. ZPZach Perret1:06

      For those that, the, the, that aren't aware, um, in 2020, uh, we sent paperwork to sell the company to Visa. Intervening period, uh, the, the, the regulators in the US had investigated it to say that, uh, to kind of ask the question, was Visa a monopolist, and was this a kind of monopoly-creating transaction? And the amazing opportunity we had within the business was, we'd grown quite massively from 2020 to 2021. Uh, COVID had, had been a huge tailwind for us, and we had the opportunity to actually, uh, walk away at the end of that deal and, and so, uh, elected to do so. Um, but no, we started working on the new product expansions before that acquisition.

   3. HSHarry Stebbings1:38

      The rapid revenue growth, was there a time when you were like, "Oh, shit. We're growing fast again and we're locked into this acquisition."

   4. ZPZach Perret1:46

      I don't think that th- there was that specific question on my mind. Um, the question that was always on my mind was, are we undershooting the long-term opportunity by being part of another company? And for every founder that's ever thought about selling their company, like, that's the key question that, that they're probably asking themselves. I don't think that most people, like, immediately orient on value, you know, the dollar value of the acquisition. Like, sure, yeah, it reaches a threshold and, and the dollar value, like, starts to make sense. But I think when people really go through that agony around, um, uh, selling a company, it's much more about, like, am I creating the long-term impact? Am I fulfilling the mission? Am I, am I achieving the vision that I've set out? And for me, it was always about that. You know, making the decision to sell the company to Visa, um, that was, you know, o- one of, if not actually the hardest decision that I've ever made. Um, uh, uh, certainly, certainly in the Plaid context. And-

   5. HSHarry Stebbings2:36

      Do you remember the moment you made it?

   6. ZPZach Perret2:37

      Oh my gosh, yeah. Yeah. It was the-

   7. HSHarry Stebbings2:38

      When was this?

   8. ZPZach Perret2:40

      My leadership team and I, it was, uh, right, um ... Uh, we were doing this offsite 'cause we didn't wanna be in the office. Um, uh, and we were sitting in my living room. I'd had them all there, we were like, had this offer and, and we were going through, like, the pros and cons of it. And, um, you know, we went around, we talked about what people were thinking, and then I kicked them all out and I was like, "Look, I need to think." Like, "I'm making this call, like, at the end of the day, like, I've gotten all of your input and I just need to think." And it was like, me sitting in my living room, um, uh, you know, my wife is out of town and I'm just kind of alone sitting there. Um, and ended up making what I think was a 51/49 call to say like, it's the right answer to sell the business, um, for a variety of reasons at the time. A year later, we had that same meeting, same group of people sitting in my living room, having the same, same style of conversation. And that was a, like, you know, 99-1 decision. I was like, pretty certain that the right answer was to walk away. I just wanted to make sure that everyone else was aligned. And what had changed in that intervening period is that our business had grown quite massively. We'd reached this escape velocity, um, and the concept of digital finance had really taken hold as something that, you know, people couldn't really live without. So yeah, that was an interesting, uh, certainly an interesting backdrop.

   9. HSHarry Stebbings3:42

      (laughs)

   10. ZPZach Perret3:42

       But go- going all the way back to ... So the question you asked was, uh, did we build products 'cause, uh, because of the acquisition? No. Now, the one thing that I did wrong there was we launched three new business areas at the same time. Like-

   11. HSHarry Stebbings3:54

       What should you have done? What would ... In benefit of hindsight, how would you change it?

   12. ZPZach Perret3:57

       One then the next, (laughs) um, as you would, as you would naturally imagine.

   13. HSHarry Stebbings4:00

       But with a year in between?

   14. ZPZach Perret4:01

       I think it's hard to do all the things that we did simultaneously. So, launch three new business areas, um, go from being a single product to a multi-product company. That is really hard, going from one to two products, one to two major product areas within a company. Super, super hard, um, because you have to figure out, um, how do you sell? How do you balance your sales resources across the two? How do you change your brand? How do you explain to your customer that you're now not just doing one thing, you're doing multiple things? Doing that, going from one to two would've been the right answer, and then maybe we could have done, done the next two at once. But going from one to four, um, uh, it was super hard. Um, I have this analogy that I use internally is like, um ... (laughs) This is gonna be a little gross. Um, it's like a, um, a snake that, like, eats an elephant, and you can see this elephant, like, slowly digesting through the snake. The correct answer is, like, a snake that eats three sheep, you eat one and then the next and then the next. But like, doing one thing where you have a, like, gigantic amount to digest- digest within the company, um, super hard.

   15. HSHarry Stebbings4:53

       What was the first thing that breaks?

   16. ZPZach Perret4:55

       Go-to-market breaks first. Um, because-

   17. HSHarry Stebbings4:58

       How does it break?

   18. ZPZach Perret4:58

       ... every one of the new things that you're doing, the product team that's working on it wants the salespeople to sell their thing. Um, and the salespeople are, like, getting internally lobbied, like, "Hey, sell my thing, sell my thing, sell my thing." Um, and like, they're disappointed, um, when you don't sell their thing. And then they, the salespeople then have to go explain it to the customer. And all of a sudden the salespeople are explaining the thing to the customer they don't know how to sell. Uh, so they're like, all right, well then I gotta, like, bring the product people to the sale. And so it- it becomes this, like, really complex go-to-market motion, um, and you have to, like, go from having, uh, a single sales team that, like, knows your products in and out to having, uh, you know, specialist sales, um, uh, having, like, uh, you know, technical account managers that are coming to things, sales engineers that are coming to things. Like, it starts to become this, like, much more complex model. So yeah, doing that all at once, I probably wouldn't have done. We also, by the way, uh, went international and, uh, started to go upmarket with our sales all at the same time. So, uh, sequencing. Sequencing is the, uh,

3. 5:53 – 9:03

   Are Great CEOs Defined by Resource Allocation?

   1. ZPZach Perret5:53

      the feedback that I would give myself if I could have 100%.

   2. HSHarry Stebbings5:54

      How did you think about resource allocation between the products? Were you like, hey, split investment across all three? One's a much bigger opportunity, let's put 80% here and 10 and 10? How did you think about that? Is it ... Uh, well, first off, actually, that's a shit question. Just do you believe that the best CEOs are the best resource allocators?

   3. ZPZach Perret6:11

      In the long term, yes. It kind of depends on the horizon and scale of the business. Like, in the short term, like, if you're, if you're a founder and you're amazing at, like, you know, finding product market fit. Like, actually no, that's, that's the best thing. Just go, go spend your time on product market fit. Um, at the mid stages, it's about like, can you build an effective company? In the long term, like, when you look at the CEOs that are, like, truly the best, like, 50-year public ... I don't know, maybe not 50 year, no, no one's, no one's in C suite for quite that long. But like, you know, 10, 20 year public CEOs are the best resource allocators.

   4. HSHarry Stebbings6:39

      So when you look at the three products, how did you approach the resource allocation problem?

   5. ZPZach Perret6:43

      In the early phase, uh, it's very easy. So you know, you build an atomic team, as small as possible. You say to they, "Go off and figure out if there's something to build here." And I've done that, by the way, with tons of other product areas, too. Um, these-

   6. HSHarry Stebbings6:53

      Sorry, an atomic team? What's an atomic team? Like a-

   7. ZPZach Perret6:55

      Y- you know, when-

   8. HSHarry Stebbings6:56

      ... generous team?

   9. ZPZach Perret6:56

      Yeah, like a, a product manager. Wh- whatever the, the smallest version of a sufficient team is. Um, so it's a product manager, uh, an engineer, maybe a few engineers, maybe a designer if you need it, maybe data scientists if you need it, depending on the type of product. And you just send them off into the ether. Um, and as a founder, your job is like, you know, you need to give them, um ...... sufficient, uh, you know, food to continue to exist, like sufficient resources and attention that they can continue to exist. Sufficient protection that, that they don't get killed by what I call the DDoS attack, where if we have a, uh, like a new product that we're working on, we tell, if we tell the whole company, we have 1,000 people now, um, you know, 950 people are gonna reach out to that team saying, "I'm super excited. How can I help?" 950 messages saying, "I'm super excited. How can I help?" um, actually, like DDoSes the system and, you know, they're, they're thus not able to move fast. So like, um, uh, with this atomic team, you give them, um, sufficient, uh, uh, resources. Uh, you give them, like, sufficient protection, uh, which oftentimes means, like, kind of ignoring them or hiding them, uh, in some sense from the rest of the company. Um, and then, uh, uh, you help them figure out how to get to their, like, at least in our case, uh, to get to, to their first design partner. So, uh, they need, like, one or two customers that are willing to go experiment with them. And so we've done this a lot. This is like how we think about a lot of new, new, new product development.

   10. HSHarry Stebbings8:07

       And then you do like milestone-based financing, which is like, hey, if we find sufficient product market fit, we'll open up new resources. How do you think about the next stage post-atomic team?

   11. ZPZach Perret8:16

       Yeah, if you, if you try to over-processize that, then it doesn't really work. Like, a lot of people try to run, like, an internal VC style model-

   12. HSHarry Stebbings8:23

       Yeah.

   13. ZPZach Perret8:23

       ... which is like, you know, "We'll fund you for a million bucks for a year, and you'll figure it out."

   14. HSHarry Stebbings8:27

       And then you've gotta come back and pitch for a series A style internally. Yeah.

   15. ZPZach Perret8:30

       Yeah. And you can do that, but it be- it becomes over-processized, and then everyone starts to, like, try to hack the process, as opposed to, like, really finding the, the unique insight. Um, I'd rather just, like, let people go run at a thing for a while, and like, usually they will come, like, uh, at least I've found, they'll come back and say, "Hey, this, this is not gonna work." Or like, "Hey, there's something very real here." They might come back in a week and say, like, "There's something very real here, and, like, I, I have a customer that's like chomping at the bit to buy it. Like, I really need to fund it now." I don't want them to wait 18 months to come back and ask for more resourcing. Um, on the flip side, uh, you know, no one inside the company wants to go like off in a foray for like three years finding nothing.

4. 9:03 – 10:37

   What Is a Grinder Problem?

   1. ZPZach Perret9:03

   2. HSHarry Stebbings9:03

      In terms of the problems that they're pursuing-

   3. ZPZach Perret9:05

      Yeah.

   4. HSHarry Stebbings9:05

      ... we chatted before, and you said to me about a brilliant startup problem that you like called the grinder problem.

   5. ZPZach Perret9:10

      (laughs)

   6. HSHarry Stebbings9:11

      Uh, but, um, I just wanted to ask, what is a grinder problem, and why do you find them attractive to do as a company?

   7. ZPZach Perret9:19

      The early history of Plaid was, um, we needed to integrate with all the banks. And these integrations were not like, you know, flip a switch, magically the integration's on. It's like a lot of work, uh, to actually set up integration with a bank. Uh, in the early days, we had to actually build, uh, screen scrapers, uh, for the banks, because the banks didn't have APIs. Um, and like every screen scraper was different. Um, and we had this realization, um, you know, not very far into the company. If we're able just to grind out all the integrations, we're gonna be better than anyone else. We will build better technology, yes, for these integrations, but also no one else is gonna do this thing that we're doing, like no one else is as crazy as we are to be willing to like go grind out, you know, 12,000 bank integrations and then like make them all scale and like build all the software that n- you need to like self-heal the integrations. It's really just a mess. Um, and anytime we find a problem like that, I'm like, "Yeah, that's it." Like, I get excited about it. And everyone inside the company, like even though we talk about this concept, uh, people inside the company are often like, "Ugh, it's gonna be so hard. It's gonna be s- like, you know, it's gonna be difficult. There's like a long path, it might not work," so on and so forth. And I just believe that sometimes if you're willing to grind it out, you're gonna have a unique product that no one else is willing to build or able to build sometimes. Um, and so, you know, those things that are not necessarily like, it's not about the intellectual brilliance of the strategy that you come up with. It's about your ability and desire to do the work. Um, I love those kind of challenges.

   8. HSHarry Stebbings10:35

      So I was talking to actually

5. 10:37 – 14:17

   Is There Defensibility on Day One?

   1. HSHarry Stebbings10:37

      one of my partners on the investing team yesterday, and they were saying, "But there's, there's no defensibility in the company," and it's, it's like a seed company. It was like two customers and 400K in revenue. They're like, "There's no defensibility." I'm like, "I don't really think any startup has defensibility on day one." How-

   2. ZPZach Perret10:51

      That's exactly right. On day one. That's the most important part of your statement, though.

   3. HSHarry Stebbings10:54

      Tote on day one. No, listen, a year in, absolutely we could have grinded out a load of work, which doesn't mean we've got huge defensibility, but there's still quite a lot to catch up.

   4. ZPZach Perret11:03

      Yeah.

   5. HSHarry Stebbings11:03

      Do you agree with me there's no defensibility on day one?

   6. ZPZach Perret11:06

      Yeah. I mean, on day one, everyone's starting from nothing, right? If, if, if you had, uh-

   7. HSHarry Stebbings11:09

      But are they if they're coming from 10 years with knowledge of the banking sector, they... Do you see what I mean?

   8. ZPZach Perret11:15

      Fine, maybe. Um, but I, I guess my take is in general, you know, if you have two atomic teams, you throw them the same problem, and if they have like roughly the same skills, they're gonna start from roughly the same place. And one might move faster 'cause they have this knowledge or, or background or whatever it is. Um, and when, that, that has been like one of the things that I've evolved my thinking on quite a lot over the years, is like the importance of experience. I think a lot of people worry too much about defensibility in the immediate term, in, like at, at the start of a new project. Um, and they worry far too little about defensibility in the late stages. Um, so as long as, you know, the, the grinder problem, the, the, the difficult hard hustle problem that you're going after, um, has the ability to be meaningfully differentiated in the long term via network effects or brand or scale or whatever it is, um, then it's great. But, um, if it never has that ability to be differentiated, I mean, you know, be careful with your time.

   9. HSHarry Stebbings12:01

      I'm so enjoying this, dude. I totally, with you on the importance of the grind and the value that comes from it. When does grinding not necessarily lead to better or more value?

   10. ZPZach Perret12:11

       Well, I guess it would be situation specific, but you know, if your customers don't care, uh, then it's hard. Um, you know, I'll give the Plaid example. Um, in the US, the banking system is incredibly fragmented. Um, there are tons and tons and tons of different banks. In Canada, it's less fragmented. There's still a, a decent long tail. In the UK, there's a decent long tail, and, uh, in Europe, there's, there's quite a long tail. In certain markets, there's like four banks. Um, there's just not an opportunity for a grinder problem there in terms of like building bank integrations. That's not the hard thing. There are many other hard things about building financial infrastructure in that market. And like, we will find those things and build in those markets over time. Um, but we kind of like look for those areas where like, you know, the repeated work and the scale of the repeated work is, is, is really important.

   11. HSHarry Stebbings12:54

       On the experience side, are there areas where more experience is dangerous?

   12. ZPZach Perret12:59

       Always. I love recruiting, one of my favorite things to do. I started out hating recruiting. Um, and it was one of those things where I realized that if I didn't become good at it, and if I didn't learn to love it, then I was gonna be, you know-... I would build a terrible company 'cause, uh, you, you, you read, uh, any, any business book. Good and great, right? First is, do you have the right people on the bus? Second is, what the heck are you building? Uh, but first is, like, get the, get the people right. And I realized if I, if I, if I didn't start to enjoy recruiting, then that would be a challenge for me. So I went deep in, like I figured out kind of, like, uh, convince myself, trick myself in all these different ways to like love, love, love recruiting. Um, the key for me was, um, I'm super competitive, uh, I like games, um, and, uh, recruiting is a win/loss game. Can I get this person to want to work at my company? Can I find the best person? Um, and then pretty quickly I will know, yes, they accepted an offer, they didn't accept the offer. So for me now, it's like this intense form of competition with myself on can I find the, find the person, like I love the hunt, um, and then can I convince them to join me? You know?

   13. HSHarry Stebbings13:53

       What about discoverability? And what I mean by that is, like, I think recruiting is like a search for the truth, and that sounds like super lofty and like I've just swallowed a, you know, Jay Shetty book. But it's like win/loss assumes you want them.

   14. ZPZach Perret14:04

       Yeah, of course.

   15. HSHarry Stebbings14:05

       And, like, actually for me, the challenge is determining-

   16. ZPZach Perret14:08

       Filtering.

   17. HSHarry Stebbings14:08

       ... true greatness.

   18. ZPZach Perret14:09

       Yeah. I mean, that's, like, a crucial part of it as well. Um, so it's, it's like, uh, finding them, um, making sure that you're right, and then kind of winning.

6. 14:17 – 17:57

   Biggest Lessons on How To Do Outreach

   1. ZPZach Perret14:17

   2. HSHarry Stebbings14:17

      Okay. Let's start on finding them.

   3. ZPZach Perret14:18

      Yeah.

   4. HSHarry Stebbings14:18

      I heard you are amazing actually in terms of your outreach.

   5. ZPZach Perret14:22

      Yeah. Like-

   6. HSHarry Stebbings14:22

      If you find great talent, how, what have been your biggest lessons on how to do outreach well?

   7. ZPZach Perret14:27

      One of the things that someone told me really early in my career is that, um, the best thing that you can do is go learn from other people that are willing to talk to you. So I got really good early on at just sending cold emails to people saying like, "Hey, I love this thing that you do. I'm super, super impressed by it. Will you, will you talk to me on the phone for 15 minutes and tell me about it?" And people were shockingly willing to do that early in my career. And it applies the same way for recruiting. Um, uh, so, so by the way, exactly what I just said you can do just to get people that you kind of want to recruit but aren't recruitable. Um, but in general just saying like, "Hey, you know, I'm Zach. I started this company called Plaid. I've been super impressed by, you know ..." whatever you're impressed by, uh, for that person. Um, and just say, "Hey, w- w- we're hiring for this job. Are you willing to talk to me about it?" Um, and, you know, they ignore you a bunch of times, they say no a bunch of times, but some people say yes. If you do it enough-

   8. HSHarry Stebbings15:12

      (laughs)

   9. ZPZach Perret15:12

      ... um, then it starts to work. And like that, the same thing you can do over email, you can do it over the phone, you get introductions. But like it's the same process of like, "Hey, I'm genuinely interested in you, and like, I have an opportunity that you might be interested in. Like, can we have a conversation?"

   10. HSHarry Stebbings15:22

       Yep. I totally agree. I think short and succinct is really important.

   11. ZPZach Perret15:25

       Totally.

   12. HSHarry Stebbings15:25

       I get it too where they're like four pages, and that's long. (laughs)

   13. ZPZach Perret15:29

       Uh, this is related to recruiting but, but sort of not. Early on in the company, I had a five-sentence rule, um, which is if you write an email with more than five sentences, uh, no one's ever gonna read it. So write them with less than five sentences. But-

   14. HSHarry Stebbings15:38

       Why did you change that?

   15. ZPZach Perret15:40

       Well, well, I mean, so- sometimes you do need to write a long internal email, uh, for, you know, completeness sake or, uh, sh- sharing all the details. But for recruiting, I think it's very true. Don't write more than five sentences in an email.

   16. HSHarry Stebbings15:50

       Okay. So we get on the call or we get in the process with this person. In terms of talent assessment, how have you changed your approach, mindset, appreciation towards talent assessment?

   17. ZPZach Perret16:02

       So we have a couple of these, like, core philosophies, and one or two of them have evolved. One of them is hire for spikes. This one hasn't really changed. We look for people that are incredible at some things even if they have, like, glaring weaknesses in other areas. So long as we have a team that can balance that out, um, we would rather have a spiky person, because it turns out, uh, you know, a well-rounded person that maybe doesn't have any really tall spikes, um, uh, if you build a team of those, you'll have like, you know, one certain, uh, you can imagine like a level, uh, or like kind of a ... if you were to chart this out, you can imagine like they're, they're only reach a certain max on the vertical axis. Um, but if you have spikes and you, like, make the spikes all kind of work together, then like the, the level they'll reach on the vertical axis is far higher. Uh, so hire for spikes is a, a big one for us. It also means that we like people that are weird, that have unique experiences, that are different, that have a different background or, or different way of thinking about the world. So that's been a big one for us. Um, one that I've changed was, uh, there's this thing internally called the experience trap, where we basically thought that anyone that had been doing a certain thing for like more than 15 or 20 years like kind of wasn't a fit for Plaid, um, because, um, we just had this bad assumption that people that have been doing a thing for that long like weren't gonna hustle. Th- th- this was based on our own experience, meaning like we'd interviewed a bunch of people and like, um, uh, kind of either seen friends or ourselves made some hires of people that had been really experienced but like weren't willing to work that hard or, um, you know, were really jaded in their thinking. Um, and so we kind of avoided that early on in the company. Um, but also there was a time when experience didn't matter as much. Like, hustle mattered a lot more. Um, now that we're getting later into the company and as we're going to these more specialized fields, you know, finding someone that's been a machine learning fraud engineer for 20 years, um, they're gonna make a huge difference on your fraud product. You just have to filter for mindset, right? You have to filter for the hustle. You have to filter for, like, the values that we actually really think are important within the company. And so we've shifted our, our thoughts on experience quite a lot. Um, we do still want this balance though. Like, we want this, like ... We're in financial services. We want a 70/30 split. 70% of people on our team should not have come from financial services, 30% should have.

7. 17:57 – 18:32

   Hiring Mistakes

   1. ZPZach Perret17:57

   2. HSHarry Stebbings17:57

      What has been the biggest hiring mistake that you've made, and how have you changed as a result of it?

   3. ZPZach Perret18:01

      Sometimes you get really annoyed with the search that's been going on for a long time and you're like, "I just need to hire someone." And sometimes that's actually true, um, and often that will lead you to make a mistake. But let's imagine I'm an early stage company, um, I can't find the right accountant, um, but I just need an accountant. At some point, you're actually right. Yeah, you actually do just need an accountant. Um, uh, but y- chances are that hire that you're gonna make is not the right one. You have to, like, dig yourself out of that later. So, like, usually it's been the, like, I really actually just need this job to get done for a little while, um, and I know I'm gonna have to go back and, and fix it later, but that's

8. 18:32 – 21:05

   Founder Mode

   1. ZPZach Perret18:32

      okay.

   2. HSHarry Stebbings18:32

      How do you feel about founder mode? Obviously, PG's essay went completely viral. How did you feel about it?

   3. ZPZach Perret18:38

      I was surprised how viral it went, um, and it clearly struck a nerve for a lot of people. So look, I think there's a lot of aspects of it that are really good. Uh-

   4. HSHarry Stebbings18:45

      Why were you surprised by how viral it went?

   5. ZPZach Perret18:47

      It just, just the speed of it. Like, every founder chat I'm in, we're talking about it. Like, you know, within the company, multiple people brought it to me, I brought it up to our exec team. Like, it was just, like, this really fast set of conversations that-

   6. HSHarry Stebbings18:57

      Did you not find it obvious?

   7. ZPZach Perret18:59

      I think it's gonna be one of the blog posts that is the most misused and actually causes a lot of the worst behavior in startups, um, for a long time. And I think for the people that truly get to get to the, get to the level, um, uh, of, of having all the context that he does, um, then, then it'll actually be a huge unlock, um, for a lot of these people. The reason I think it's gonna be misused is a few-fold. First is...... y- w- one way to read it is to, like, deeply undervalue, um, great execs, um, and I think that that's totally wrong. Um, uh, a second way to read it is the founder should micromanage everything. I'm a fan of, like, sweating the details, which is one of our, our, our core values, um, in certain areas, um, if you try to micromanage everything, you, it's, it's never gonna work. And I think he, like, didn't hit the nail on the head of, like, just, like, the whole point is, like, delegate effectively. Um, if you delegate something and it really matters, you gotta stay close to it. If you delegate something and it doesn't matter, you can stay a little further away from it. Um, don't over-delegate, um, 'cause I think that that's the mode that it seems like a lot of people at companies, that we're talking about a lot, were in. Um, and I've certainly seen that. Uh, we certainly made, made mistakes with over-delegation. But I do worry that it's gonna be a little misinterpreted.

   8. HSHarry Stebbings20:09

      I, I totally agree, and it's used as a justification for a lot of bad behavior to happen.

   9. ZPZach Perret20:13

      Exactly.

   10. HSHarry Stebbings20:13

       And you have people like, uh, uh, Ryan Petersen at Flightsport, who, like, is a phenomenal CEO, and you, who are a phenomenal CEO, but, but not everyone is Ryan or Zach. And that doesn't mean they're bad CEOs, but it just means it's maybe not as applicable.

   11. ZPZach Perret20:27

       Totally. Like, I, I think people are gonna see the, their S- Steve Jobs' top 100, uh, offsite that he did. People are gonna see that and say, "I should do a top 100 offsite, or top 50 offsite, top 20 offsite." That's actually, like, horrible in a lot of companies. Like, he did it for a specific reason, um, uh, and I don't know what the specific reason was, but, like, he had a specific reason in mind, and, like, the way that he applied it and used it was, like, incredible for Steve Jobs at Apple at the size that they were at the time that it was that thing. Um, it doesn't mean that that practice is universally applicable. I also think that, you know, like, like, building a philosophy off of Brian Chesky, who's, like, you know, o- one of the most amazing leaders, like, yeah, everyone can learn a lot from Brian, um, but

9. 21:05 – 23:17

   Popular Silicon Valley Beliefs That Zach Disagrees With

   1. ZPZach Perret21:05

      not all of us are Brian.

   2. HSHarry Stebbings21:06

      I totally agree. I mean, Fred Wilson did this, uh, blog post on reserve utilization and the importance of reserves in early-stage portfolios recently, um, and B, he said basically everyone needs them and how you can use them to ... effectively to drive DPI and returns. And it's like, yes, if you're a brilliant picker like Fred Wilson is-

   3. ZPZach Perret21:25

      (laughs)

   4. HSHarry Stebbings21:25

      ... who is legitimately one of the best investors of the last two decades, but most people are not very good pickers and concentrate capital into the wrong companies. Again, exactly the same point. What other things are very common beliefs which many agree with in Silicon Valley echo circles that you're like, "No, I don't agree with that"?

   5. ZPZach Perret21:43

      I, I do think that a lot of the advice given, quote-unquote, um, is really applicable narrowly and not broadly. And so I think, like, every founder needs to, um, you know, for the big, important things, um, make a decision on their own of what really works, and then, like, be willing to go back and remake those decisions time and time again. Um, I will say, like, I think that for, you know, 80% of the things in a company, you can literally just copy what's been done before, and 20% of the things you need to be unique and spend all your effort in being really, really unique. But there are some of these things, like, um, I'll take for example sales. Like, one of the most common early-stage things that people will tell small companies, um, is, "You need to go hire a VP of sales," um, if you're an enterprise company, if you're able to do founder-driven sales. Like, I think that's actually totally wrong. Um, like, for me, I, I didn't wanna hire a VP of sales for a long time. Um, I hired this group of these, like, amazing young people that would, like, just help me do sales. Like, they was kind of like a, like, I was driving sales, and, like, they were around me, like, making it more efficient. They were ghostwriting my emails, all this stuff, I was overseeing it. And, like, that scaled us for quite a long t- like, way longer than it should've. But in doing that, I learned way more about our customers and way more about how to build a great product for our customers, um, than I could've in a- any other way. And so, um, don't hire the VP of sales early if you don't want to, like, if you don't think that's right for you, um, um, do it that way. S- OKR is another one. Um, I think OKRs are, like ... OKRs were built for manufacturing. Um, we don't manufacture software. Um, uh, you know, we're not running an assembly line to ex- to, to create software. Goals are important, um, but, like, you know, do it your own way. Don't just read the Andy Grove book and try to apply this thing that worked for Intel to your business if it doesn't actually fit to your business.

10. 23:17 – 25:02

    Is Speed the Key to Going from 0 to 1?

    1. ZPZach Perret23:17

    2. HSHarry Stebbings23:17

       Is speed the single most important thing for companies going from zero to one?

    3. ZPZach Perret23:20

       No. Being right is, and then speed.

    4. HSHarry Stebbings23:24

       What does that mean? Like, being strategically right on the problem that you're solving and then acting with extreme execution speed?

    5. ZPZach Perret23:31

       Yeah, so one of our company values is move fast, um, but you have to be careful when to apply move fast. Like, once you've found product-market fit, yeah, move fast. That's absolutely the right thing to do. Before you have product-market fit, sure, maybe you should move quickly through ideas, but also, like, m- spending the time to think about what the right thing is, like, gathering the signals, gathering the data, understanding what you need to do. Like, be right and then move fast, um ... I don't know, it's- that's what we talk about .

    6. HSHarry Stebbings23:57

       No, I, I totally get you. Uh, uh, Ryan at Flightsport told me very wisely, I think he said, "Velocity is the most important thing, it's speed in a given direction." And I'm like-

    7. ZPZach Perret24:05

       True.

    8. HSHarry Stebbings24:05

       ... that's a, that's a good one.

    9. ZPZach Perret24:07

       Well, speed ... uh, vel- velocity's correct, speed in a given direction. The direction also should be right, like, it should be the correct direction.

    10. HSHarry Stebbings24:13

        Do you feel like we've got in a manufacturing line on venture funding companies? And what I mean by that is, like, it feels like so many founders get on this production line of, "I'm gonna hit a million in ARR, and then I'm going to raise my A, and then I'm going to hit five million and raise my B, and then 20." And it just feels a little bit over-manufactured and almost forgetting the fact that we build products for customers who give us money.

    11. ZPZach Perret24:39

        My take is great entrepreneurs are gonna apply their unique lens to what they do. Like, we, we have this weird philosophy, like, I, I think that raising money is, like, a big waste of time, so we try to raise money as infrequently as we possibly can within Plaid. So, like, you know, we go, like, two and a half, three years between funding rounds, and in the early days, you know, um, some people would call us and be like, "Oh, is the company dead 'cause you haven't raised in the last 12 months?" And we're like, "No. Like, revenue's growing. Everything looks great." Um, yeah,

11. 25:02 – 28:12

    How Zach Balances Big Rounds with Dilution & Valuation?

    1. ZPZach Perret25:02

       we just didn't wanna raise money.

    2. HSHarry Stebbings25:03

       How do you think about that, though? Because if you wanna raise money every three years, say, for example, you're gonna have to raise a chunky round. You're gonna have to either take a, a lot of dilution or you're gonna have to have a really inflated price. How did you think about that?

    3. ZPZach Perret25:15

       We kind of did-

    4. HSHarry Stebbings25:16

       Um ...

    5. ZPZach Perret25:16

       ... what felt natural for the company and what felt right for us. Um, my take is, like, money is a resource. When you need the resource, you should go get the resource. Um, and you should do it, yes, of course, in the most efficient way that you possibly can. But for a certain amount of time, we just didn't need the resource, you know, we weren't spending a ton, or, like, like, our, our business was profitable in the early days. Like, n- not intentionally, it just happened to be, um, and so we were like, "Oh, well, we don't, we don't need the, the money resource." Like, money is not the tool that we need to use in order to solve the next challenge. Th- then later it became the s- the tool, so we went and raised more money.

    6. HSHarry Stebbings25:42

       There's a brilliant statement, "Always be raising." Do you disagree with that?

    7. ZPZach Perret25:45

       Yeah. That seems like I would've wasted a lot of time. (laughs)

    8. HSHarry Stebbings25:50

       (laughs) What was the hardest funding round?

    9. ZPZach Perret25:52

       Our seed round was horrible.

    10. HSHarry Stebbings25:53

        Why?

    11. ZPZach Perret25:54

        Oh, my gosh. We have this crazy story. I, I haven't... I don't think I've told this publicly. We started out first building a consumer app. Um, we wanted to create... So this is kind of post-2008 financial crisis, um, there's this movement called Occupy Wall Street, and it was like people, like, moved tents in and, like, lived in Wall Street and, like... It's a very kind of chaotic type of protest, but, like, the big takeaway from everyone was consumers are really frustrated with financial services. They don't think that the banks are building the products they want. So being, like, kind of 23-year-old entrepreneurs, um, we set out and said, "We're gonna go build, uh, a better budgeting tool for consumers, 'cause that's gonna help consumers live a better financial life." So you know, we, we, we had this, like, whole story for a year. We, like, built a bunch of these, they all failed and, um... Then we pivoted to, like, build this infrastructure piece, which was basically the backend to our, our previous product, and, like, that was actually a really good idea. Um, but, uh, when we were trying to raise from people, like, everybody said no to us. Um, we actually lined up this early funding round, um, this 500K funding round at, uh, like a $2 million valuation. The lead investor for this funding round, like, backed out, and... And he was, uh, I think, investing like $100,000 or something like that. Um, and then the rest of the funding round fell apart. Um, and we were out of money. We were basically dead as a company. Um, and so we went to all the investors that had been planning to invest and we were like, "Hey, look, the lead has backed out. We'd still love to take your money, but the lead is gone and we just wanna be transparent about it. We don't want it to be a surprise." So we did and everybody walked away from that, except for these three people, all named Justin. Um, and they invested a collective 60K in the company. That, like, kept, kept us alive. Um, so they ke- they invested like 60K at two, maybe two and a half million dollar valuation. Um, and that was, like, basically, like, that was the lifeline we needed to, like, sustain until we could, like, get to, um, like, some customers that were actually using it. We had a, a late stage contract with Venmo. Then th- there was maybe, like, six or eight months later that we went back and raised the seed round. It was, um, uh, valued at, I don't know, like, $11 or $12 million. So, like, an actual good step up.

    12. HSHarry Stebbings27:47

        Did you think you were gonna die?

    13. ZPZach Perret27:49

        Yeah. But I mean, you know, we hadn't paid ourselves in six months at that point. We were like, "Whatever." We were... At, at some point, we were gonna, like, actually run out of money. Um, my, my co-founder was living on a friend's couch. I moved in with my girlfriend because, uh, uh, I couldn't pay rent anywhere. And I had, like, a f- moderate amount of credit card debt, which I don't advise to any other founders. Um, but, you know, we thought we were gonna die, but we also... We had nothing to lose. Um, so

12. 28:12 – 30:52

    Making Money or Taking Secondaries Changed the Mindset?

    1. ZPZach Perret28:12

       you just keep going.

    2. HSHarry Stebbings28:12

       How did you think about secondaries and just money as you progressed through the company? Like, again, I, I don't want this to be, like, a one-sided journalist-versus-founder. Like, for me, making a little bit of money really enabled me to think differently, and I'm actually super pro-secondaries for founders. How do you think about it, and did it change your mindset at all?

    3. ZPZach Perret28:33

       When we, uh, did the sale to Visa that ultimately didn't go through, we raised a funding round afterwards. One of the most complex things to do in that funding round was I wanted to try to max the number of people that could participate in the secondary. We couldn't get to 100% of employees, but we got to, like, the large majority of majorities that were... e- employees that were able to, to participate in that secondary. And that was hugely meaningful to me, hugely meaningful to the team on the other side. Keep in mind, we'd said, "Hey, we're selling the company for, for $5 billion." Then we said-

    4. HSHarry Stebbings29:00

       The price was 13.

    5. ZPZach Perret29:01

       Well, l- let me finish the whole story.

    6. HSHarry Stebbings29:03

       Sorry.

    7. ZPZach Perret29:03

       Uh, first it was like, "We're selling the company for $5 billion." Um, then, um, uh, we got to the end of a year and, like, everyone's like, "Oh, okay." Like, you know, people, people, they don't spend the money practically, but they spend the money in their head.

    8. HSHarry Stebbings29:14

       They do.

    9. ZPZach Perret29:15

       Um, and-

    10. HSHarry Stebbings29:15

        They've got their number.

    11. ZPZach Perret29:17

        Exactly, exactly. A- and look, they deserve it, right? Like, I, I... Who, who am I to say that they, they, they shouldn't get mentally locked into the thing? Like, we said we're gonna sell the company for this amount of money. Visa's a very legitimate buyer. Like, there was real cash coming in, um, uh, that was the plan. Um, and I told them there was risk. But, you know, you spend the money in your head. Um, then we had to get to the end of the transaction, and we walk away. And I was like, "This is gonna be better for the company in the long term." Um, and I, I truly believe that. Um, yeah. But, all of a sudden they couldn't spend the money. Uh, there's a very different, uh, aspect of liquidity that was... Th- th- that was real for them. And then we said, "Look, we're gonna go raise money and we hope that we're gonna let you participate in a, in a, in a secondary." And, like, that was, like, a pretty hard thing to say, but I also couldn't... I didn't want to guarantee anything, 'cause I, I couldn't. Um, then we had the secondary, then we did as much-

    12. HSHarry Stebbings29:59

        Did they respond badly to that?

    13. ZPZach Perret30:00

        Uh, some of them did, yeah. But i- not, not selfishly, just, just practically.

    14. HSHarry Stebbings30:04

        No, understandably. Yeah, of course, you, you hope and-

    15. ZPZach Perret30:07

        P- people, people planning to buy a house, for example. Then, uh, we do this... D- do the, do the, do the next round, which was, yeah, a big step up valuation, um, and we let people sell as, as... Kind of... We wanted to create a rational amount of, um, sale. We let them sell as much as, as, as we could rationally. But, like, you know, it wasn't this full amount. Um, instead of buying, you know, a house, maybe you... Something larger than a car, but less than a house, um, you know, is like a, a, a chunk of what they could sell but wasn't the whole thing. That, I think, was a... like a, a hard thing for them. Good outcome, like, 'cause they could see the light of the future and the growth of Plaid and, and so on and so forth, but, um, definitely a, a, a hard whip-lashy thing. Um, but I think that it was really great that we let our, our, our employees participate there and, um, you know, as we were able to do more secondaries in the future, um, really focusing on the team is...

13. 30:52 – 32:51

    On Raising $13.4BN Valuation

    1. ZPZach Perret30:52

       That, that would be the goal.

    2. HSHarry Stebbings30:53

       Are you pleased that you raised a $13.4 billion valuation?

    3. ZPZach Perret30:57

       The true value of a private company is impossible to tell, right? The true value of a private company is what someone is willing to pay to buy an incremental share of that company. In a lot of senses I wish we had a real time mark to market, um, because that would make it much simpler to do things like compensating employees and, you know, doing acquisitions and, and so on and so forth. Um, the reality is we raised money in the situation and in the environment that we were in at the time. Um, Plaid's valuation has gone down since then. Um, frankly, the valuation of every tech company has gone down since then.

    4. HSHarry Stebbings31:27

       And by the way, as a founder, your job is to raise money and dilute, in some cases, as little as possible.

    5. ZPZach Perret31:33

       Yeah, so there, there's a fiduciary thing that pushes you towards the raise at max valuation, um, uh, and then, you know, the investors that invest be darned. My view is different. Like, I feel a deep responsibility to the investors that invested in Plaid. Like, I want every one of them to make a lot of money on Plaid, and that means that my expectations for the company are really, really high, um, 'cause I know I have to get back to a high hurdle rate that we've had in the past. Now, I believe that we'll do it. I believe it'll take some time, but I believe that we'll do it. Um, the underlying fundamentals of the business look way better now than they did, uh, when everyone invested. But, uh, the rea- reality is that the multiples have changed, um, and so...... you know, we're on a long journey. Like, got, we got work to do. We gotta, we gotta make sure that everyone makes a bunch of money on, on, on their investment where they invested. And, um, if we're lucky enough that the investors continue to hold through that entire period, like I really believe they'll be able to do it, but, th- that takes patience.

    6. HSHarry Stebbings32:21

       Did it enable you to do things that you couldn't do alone?

    7. ZPZach Perret32:23

       Yeah, exactly.

    8. HSHarry Stebbings32:23

       'Cause that's the only thing that is cool.

    9. ZPZach Perret32:25

       Exactly.

    10. HSHarry Stebbings32:25

        Like Instagram and Facebook, everyone's like, "Oh, what a mistake." Mm ...

    11. ZPZach Perret32:30

        I can't comment on Instagram and Facebook. The structure that we set up with Visa was that we were running as an independent entity. We had access to all the tools internally. I was the CEO of the independent company, and we could run as fast as we wanted to in the direction that we wanted to, and we got a boatload of funding to go do it. That's not the worst setup. Now, might like the independent path better. Um, but anyway, I, I don't know. No, n- no answer

14. 32:51 – 33:49

    Is M&A Completely Shut Down? What Could Lead to Its Revival?

    1. ZPZach Perret32:51

       is, uh, is an answer.

    2. HSHarry Stebbings32:52

       All right, listen, I, I, totally ... (laughs) . It was a hard question. Um, when we look at M&A more broadly, you know, I'm an investor. We think about liquidity, now or never, and th- there is no fucking liquidity. There's no liquidity for LPs. They're choked up to their neck with lack of liquidity. And I look at M&A first, and it's just completely shut. Is that a fair representation, and do you think M&A is completely shut, one? And what do you think will lead to it opening?

    3. ZPZach Perret33:18

       So I think it'll change over time. Um, so, so far as I can tell, I think the large M&A transactions are mostly getting deeply investigated and oftentimes blocked by the regulators. That political environment will change eventually. I don't know how fast. I don't know when. Um, we did see some of these, like, odd, like, acqui-hire, like, large AI acquisitions, which have been fascinating, but I don't think that works with a company that has tons of contracts that they actually want to transfer over to the acquiring company. Keep an eye on that. I, I, I can't, can't predict the future, but, um, I do think that it's pretty hard to do large M&A right

15. 33:49 – 36:41

    IPO Markets Today

    1. ZPZach Perret33:49

       now.

    2. HSHarry Stebbings33:49

       On IPOs, another form of liquidity, how do you think about IPO markets today? It's something, again, that as a, a late-stage founder, you always have to be alert and awake to. How do you think about IPO markets today?

    3. ZPZach Perret33:59

       The viability and the excitingness and the value of an IPO changes a lot, uh, for, uh, for a lot of founders. Um, look, in the long term, uh, we said this before, in the long arc, we would like to be a public company. Um, we're not in any specific rush to do so. Um, and generally, I think of an IPO as a m- meaningful, important milestone and a fundraising event. When you need the capital, when you need the milestone, when being public is, is really useful to the company, then you should go do it.

    4. HSHarry Stebbings34:22

       But now would be an inherently unattractive time for you to go public.

    5. ZPZach Perret34:25

       Yeah, it would be, for, for a variety of reasons, um. I'm sure that'll change in the next, I don't know how long, but, but in the next few years.

    6. HSHarry Stebbings34:32

       But like your would say, pe- like companies, um ... He hasn't said this, but like, companies of your profile should go public, should actually take the hit on valuation, and they will grow into great companies in public markets.

    7. ZPZach Perret34:43

       Well, I definitely believe that we will grow into great c- uh, in- into a great company, if, uh, if we're not there already. Um, and I'd, and I'd, and I would love to have that increased rigor that being a public company brings. Like I think that's actually probably a really useful thing for companies. Certainly, all the public CEOs that I've talked to, or many of the public CEOs, I shouldn't say all 'cause it's not true, um, but many of the public CEOs that I've talked to said, like, you know, the rigor is a really good thing. It's helpful, so on and so forth. But on the flip side, um, you know, it is a milestone and it is a very useful tool for, for us to do at some point in the future. But, um, that day is not today, um, and, uh, you know, that day will hopefully be in the next couple years.

    8. HSHarry Stebbings35:17

       Someone said a, a great statement to me the other day. They said, um, "The heaviest things in life are not iron or gold, but unmade decisions."

    9. ZPZach Perret35:24

       (laughs)

    10. HSHarry Stebbings35:25

        What unmade decision weighs on your mind most?

    11. ZPZach Perret35:28

        Philosophically, like I have a very hypothesis-driven decision-making model, which is you ask me a question, I have an answer. Uh, like I'm, it's not a deeply held answer always, um, but I'll always start with a starting point. Um, within the company, we push this really hard. So if there's a decision to be made, there's always a straw man of, of what the decision is. Um, I'm not sure I have like a specific unmade decision that does this one thing, yeah.

    12. HSHarry Stebbings35:46

        Does that not get you in trouble with your wife?

    13. ZPZach Perret35:48

        Um, all the time.

    14. HSHarry Stebbings35:49

        Yeah.

    15. ZPZach Perret35:49

        Yeah.

    16. HSHarry Stebbings35:49

        (laughs)

    17. ZPZach Perret35:50

        Gets me in trouble with my wife, um, because she's like, "Why are you so confident in this thing that you've never thought about?" I'm like, "I'm not confident." Like, the, so actually, um, and I think you were planning to ask this question later, which is like, what's the question that no one ever asks you that they really should?

    18. HSHarry Stebbings36:00

        Yeah.

    19. ZPZach Perret36:01

        For me, the question that no one ever asks me is, "How confident are you? And how much do you care?" Uh, so if you ask me, "Hey, what's, is, is the answer red or blue?" Red. I don't know. "How confident are you?" Zero percent confident. "How much do you care?" Not at all.

    20. HSHarry Stebbings36:14

        (laughs)

    21. ZPZach Perret36:14

        Um, like those three need to go strong together.

    22. HSHarry Stebbings36:16

        Okay, th- so I'm the, exactly the same as you, but someone said to me wisely the other day, "What you forget, Harry, is the weight of your words. And you said that with real confidence, and the team just went with it because of that."

    23. ZPZach Perret36:26

        (laughs)

    24. HSHarry Stebbings36:26

        And I'm like, "Oh, shit. Okay." And so do you worry that actually your words carry a lot of weight, and because you do say things with great confidence, it's like, "Well, shit, Zach said that. I mean, fine, let's do that"?

    25. ZPZach Perret36:37

        Yeah, I do worry about that. That's why I wish people would ask me the question, "How confident are you? And how much

16. 36:41 – 40:42

    The Biggest Flaw as a CEO

    1. ZPZach Perret36:41

       do you care?"

    2. HSHarry Stebbings36:41

       What's your biggest flaw as a CEO?

    3. ZPZach Perret36:44

       O- one of my biggest flaws as a leader is I, um ... I'm not great at recognition of progress, um, if the outcome is not excellence. Let's say we have, um, some problem within the company, um, and currently we're operating at a two out of ten. Um, going from a two out of ten to a four out of ten, you have just made something twice as good. My CEO tells me this all the time. He's like, "You gotta celebrate that. That is good progress. And yes, you can say there's another horizon that we gotta go to, but you gotta celebrate going from a two to a four out of ten." Sometimes that matters quite a lot. Personally, I am like never, never okay celebrating that because then my answer is like, that's a four out of ten. It's, it's like th- th- we're still horrible. And objectively, that is the correct answer if we stay a four out of ten. Um, but oftentimes, the trajectory is you go from two out of ten to a four out of ten to a six out of ten to an eight out of ten, and then eventually you get to a ten out of ten. And s- like finding a way to celebrate those like interim milestones that are not yet perfect, um, it's been really hard, and it definitely discourages people within the company, um, and like, you know, giving the internal praise of, um, "Hey, like you made progress there. Like let me cheer you on and like be the cheerleader to help you go from a four out of ten to a six out of ten to an eight out of ten." Um, that's really hard. I, I do feel strongly that you should never celebrate, um, something that just factually isn't good. Um, so something ... If we're delivering something at a four out of ten, that is factually bad.... and we should not be celebrating that we're delivering a four out of 10, but we should celebrate the progress that we're making, um, the trajectory that we're on. Um, and so, finding a way to, like, support the team through that, uh, terrible to good to great, uh, process.

    4. HSHarry Stebbings38:21

       I do think in the early days, people don't talk about kind of manufacturing wins, which is, like, often there's just, there's not much to celebrate. (laughs) It just doesn't look that great. And I think your job as CEO is to kind of manufacture almost fake or small wins into, uh, alleviate them into bigger wins, just to carry teams through a bit stagnant times.

    5. ZPZach Perret38:39

       You know, I was talking to an entrepreneur friend of mine, who I, uh, deeply respect, and, you know, we set a big, hairy, audacious goal. And then within that, we asked the team, "What's the first thing you can celebrate? Because it means that you're on track to achieve the big, hairy, audacious goal." And, uh, uh, the, the big, hairy, audacious goal, I've always done. The what's-the-first-thing-you-can-celebrate question, I've never done, and I love it. It's a huge unlock. So, now you can ask the team, "What's the first milestone that you can achieve and prove that you're going in that direction?" And then actually doing a celebration around it.

    6. HSHarry Stebbings39:05

       I used to run marathons when I was, you know, young and had good knees. Uh, but always, you always break down by five miles. "Just the next five miles." "Just the..." If you look at-

    7. ZPZach Perret39:14

       But do you celebrate the five miles when you get to them?

    8. HSHarry Stebbings39:16

       Absolutely. I would have a jelly bean. (laughs)

    9. ZPZach Perret39:19

       (laughs) That's great.

    10. HSHarry Stebbings39:19

        Or whatever that is. But just g-

    11. ZPZach Perret39:20

        You, I need to learn that from you. Jelly beans.

    12. HSHarry Stebbings39:22

        ... just, just jelly bean. Just get there.

    13. ZPZach Perret39:23

        Jelly bean in my pocket. Or, or just to... And I'd actually vary it up with a Lucozade on mile ten. (laughs)

    14. HSHarry Stebbings39:27

        Or whatever that is. But I think that's really important. What trait do you have that you're a little bit ashamed of, but it's also contributed to your success?

    15. ZPZach Perret39:35

        I'm-

    16. HSHarry Stebbings39:35

        It's, it's a weird .

    17. ZPZach Perret39:37

        ... very independent, like, very self-sufficient. Um, the downside of this is, comes from a childhood of, uh, kind of a bunch of weirdness that I won't go into now, but people find it very hard to get to know me. They find it very hard to read me, um, uh, within the company. So I, I try to be more of, I try to tell people what I'm thinking. I try to, like, you know, let my face be expressive, um, uh, which not, uh, isn't naturally. Um, usually I just smile, uh, no matter what I'm thinking. But people find it very hard to get to know me, very hard to read me, very hard to, like, empathize, um, um, with me. Um, on the flip side of that, um, it, it, it also, like, it allows me to, like, live in my own universe for decision-making or, like, big thinking. Um, so, like, my favorite times are, uh, sitting on an airplane, um, no one needs to talk to me. I can just sit there and think. I put my headphones in and I don't play anything, sometimes I play static, and I just sit there and think. And I have a notebook, and I write stuff down. And, like, this, like, kind of self-sufficiency, isolation, uh, I find gives me clarity, um, uh, in a place that, um, otherwise I might not have it.

    18. HSHarry Stebbings40:35

        Do you enjoy your own comfort, your own, like, company?

    19. ZPZach Perret40:38

        Oh, yeah, of course.

    20. HSHarry Stebbings40:39

        Not many do.

17. 40:42 – 42:47

    How Fatherhood Impacted Zach

    1. ZPZach Perret40:42

       I feel very fortunate then. (laughs)

    2. HSHarry Stebbings40:44

       (laughs) Okay. Well, final one before we do a quick-fire. Becoming a father is an incredibly seismic moment in one's life. How did becoming a father change you as a person, one, and as a leader, two?

    3. ZPZach Perret40:55

       Everybody says that having a kid teaches you time management, teaches you prioritization, teaches you coaching. I believe that all that stuff is, um, really true. Um, uh, for me, the biggest change was personal. Like, it, it just increases your capacity to love and, and, and recognize other people. My favorite thing about having a daughter is, yes, getting to love her and, um, you know, love the snuggles and all of the things that she does. But it was actually seeing my wife become a mother, um, and seeing the change that that brought about in her and seeing her capacity change, and, um, that recognition of someone, you know, who you've known for so long, you think you know super well, and then you just see this totally new aspect. Um, you know, it made me think differently about, you know, what are the underlying aspects that other people in my life might have, and, uh, how might they change over time? And, and being more open and accepting of that.

    4. HSHarry Stebbings41:39

       What is success to you today?

    5. ZPZach Perret41:41

       I think we all land in the, uh, you know, bigger, faster, more, like, the, the, the relentless pursuit of doing more, uh, uh, and so forth. And it's, uh, I fall into that trap, absolutely, as well.

    6. HSHarry Stebbings41:53

       For me, it's, like, excellence, which is, like, it doesn't have to be bigger, it doesn't have to be faster even, but it's like whatever we do, it has to be great. I care about the craft of interviewing. We have to do more shows, all our shows, what ... But they have to be really good shows. And whatever we produce, it has to be great.

    7. ZPZach Perret42:08

       Is it internally driven or is it externally driven? Do you have a threshold? "That was a good one, that was not a good one?" Or if you found a better interviewer than you ... If everybody in the world was a better interviewer than you, even though you were still objectively really good, would that be okay?

    8. HSHarry Stebbings42:22

       No.

    9. ZPZach Perret42:22

       (laughs) Yeah, exactly.

    10. HSHarry Stebbings42:23

        So much of mine is driven through external.

    11. ZPZach Perret42:25

        Competitive.

    12. HSHarry Stebbings42:26

        Yeah. What's the right way to approach competition?

    13. ZPZach Perret42:28

        I don't know. I love it, though. It, like, drives me in, in so many senses.

    14. HSHarry Stebbings42:31

        But it will ruin my day-

    15. ZPZach Perret42:33

        Exactly.

    16. HSHarry Stebbings42:33

        ... when I see a competitor do something that I think we should have done.

    17. ZPZach Perret42:36

        I think self-competition is the answer to that, at least for me. Um, it's like at, at some point, like now I, I care very little about what our competitors do. If we're not as good as we could be, that starts to become a real challenge

18. 42:47 – 46:41

    Is Investing While Running Plaid a Distraction?

    1. ZPZach Perret42:47

       for me.

    2. HSHarry Stebbings42:47

       So, (laughs) this might be spice, but, like, you raise money for Plaid, and you are a brilliant CEO in that respect. And then you just decide, "I'm gonna invest." I'm like, if you're angel investing, game on. You do whatever you want. It's your money, go, go for it. But if you're raising money from other people and then spending time investing their money, to me, I'm like, is that not a distraction to the core and to the investors that you've had invest in Plaid? And actually, that's, that's not how it should be. How would you respond to people who believe that?

    3. ZPZach Perret43:21

       It's a, uh, that's a good framing, and I appreciate the spice. Um, but going back to, like, uh, one of the themes that we've had throughout this conversation, like, you have to examine the specific rationale and reason. Um, so for me, as Plaid got bigger, I got sucked later and later stage. I was spending time with the gigantic banks, I was spending time with the gigantic companies. And I found that Plaid was, like, in some sense losing some of the founder mentality. It was, like, losing some of, like, the fine-grained attention that I needed to pla- pay to the early-stage market. And so, in, call it, like, 2016, I started angel investing, just 'cause I wanted, like, a reason to go talk to these companies. And I did a bunch of it, like, you know, uh, uh, had reasons to go talk to founders, had reasons to engage with them deeply. Um, it kept me fresh. It built a great network. I learned things that I brought into how we, we developed products at Plaid. Um, I met amazing people who we ended up hiring, and it's created this, like, really virtuous cycle. Angel investing is...Actually, I think is very distracting to founders. The reason for it is, um, it's personally on you. People want to talk to you all the time. You don't have a system for it. You, you haven't built infrastructure. You have no leverage. Um, and so for me, um, a good friend and I, uh, sat down and she said, "Hey, I'm gonna go be a full-time VC, but I really wanna start a fund." I said, uh, "This angel investing stuff is interesting because I learn a lot, but it doesn't have that much meaning, and it takes too much of my time." And so we decided to partner together. Um, she's an incredible entrepreneur in her own right, um, and she kind of decided to go raise a fund. We partnered. We, we did it together. Um, and that became the first Mischief fund. Since then, uh, there are two other amazing entrepreneurs, and we've created this fund structure that I have max leverage. They run it full time, three full time people, um, and me, who, uh, does it a few hours a week. But I get to spend time talking to entrepreneurs, helping them through sticky situations. And the amazing thing for me is, like I said, I talked about sending emails and people responding. Like the wisdom and the value of Silicon Valley, and I say Silicon Valley in, like, air quotes here because it's not about being in the place, um, it's more about the mentality. Um, that enabled me to be an entrepreneur. That, that taught me everything that I know. Um, and I think there's a value in paying it forward. And so what oftentimes happens is, you know, we have these WhatsApp threads with the founders and they'll ask them questions. And if we hear a question enough, I'll go down and write a blog post. And the blog post that I write, um, will oftentimes be something that I'll just distribute within Plaid. Like, hey, how do we think... Like, I have a blog post on atomic teams. Like, how do we think about atomic teams? Why, why do they matter? Like, why are they useful? How do we think about applying them in new product innovation? So I'll share that within Plaid. Um, I'll share that with all the founders, and like sometimes we'll even do a Q&A which we'll record, and then we'll have this artifact. And so for me, it makes me a better entrepreneur to go deep on these, like, key topics that I recognize. It prompts me to actually teach things to the company, um, in an important way, and then it creates this, like, amazing, um, kind of pay it forward mentality with the founders that we interact with. So I think, like, the average returns have to come down, uh, because, like, the amount of capital is going up and the amount of amazing companies is not necessarily going up at the same pace.

    4. HSHarry Stebbings46:11

       I agree completely. But we've moved from, like, a boutique industry, as Doug Leone calls it, to, like, a commoditized asset class.

    5. ZPZach Perret46:18

       Yeah.

    6. HSHarry Stebbings46:18

       And that's what happens.

    7. ZPZach Perret46:19

       Yeah.

    8. HSHarry Stebbings46:20

       And I, I think that's just, like, a, a natural transition that we've made.

    9. ZPZach Perret46:24

       So, to, to the question, is the VC product kind of played out? I think it's kind of played out, yeah.

    10. HSHarry Stebbings46:27

        Do you think VCs add value?

    11. ZPZach Perret46:29

        A- a few.

    12. HSHarry Stebbings46:30

        Who's the most valuable VC?

    13. ZPZach Perret46:32

        I'm not gonna answer that. Mischief. (laughs)

    14. HSHarry Stebbings46:34

        Mischief. (laughs) Who was most-

    15. ZPZach Perret46:35

        You are, Harry. You are, you are the most valuable VC.

    16. HSHarry Stebbings46:38

        That- that's gonna be the, the starting line. Okay.

19. 46:41 – 47:39

    How Has VC Funding Moved the Needle for Plaid?

    1. HSHarry Stebbings46:41

       In what way has a VC moved the needle for Plaid? And then we'll do a quick fire.

    2. ZPZach Perret46:45

       There have been a few. Um, one of them was transformational where a VC came in and said... Uh, we had a round that was falling apart, um, for, for very, uh, unrelated reasons. They came in and said, "Look, we're gonna, we're gonna stand behind this. We're actually gonna give you more money at a higher valuation, and it's gonna, like, meaningfully change the trajectory of the company." Because, like, there was some, some risk on the round that, that kind of came up mid-round, and they were like, "No, we believe so, so deeply in the company." So, like, that decision to invest at the right time, like, made a huge difference.

    3. HSHarry Stebbings47:11

       Who was that? They'll love

    4. NANarrator47:12

       (laughs)

    5. ZPZach Perret47:12

       Th- th- that was NEA. Like, they, I think the world of them, and, like, the way that they handled that situation was truly incredible.

    6. HSHarry Stebbings47:18

       That's awesome.

    7. ZPZach Perret47:19

       Yeah.

    8. HSHarry Stebbings47:19

       Don't worry. They'll love that. That's good promotion. (laughs)

    9. ZPZach Perret47:21

       (laughs) Good, good.

    10. HSHarry Stebbings47:21

        This is not like who walked away, so they'll be thrilled.

    11. ZPZach Perret47:24

        Ricky Yang, amazing. Uh, Ravi Vaswani was there too.

    12. HSHarry Stebbings47:26

        I spoke to him before, actually.

    13. ZPZach Perret47:27

        Good.

    14. HSHarry Stebbings47:27

        Yeah, yeah. He said you're a dick. (laughs)

    15. ZPZach Perret47:31

        (laughs) I don't think he's ever said that word in his life.

    16. HSHarry Stebbings47:33

        Yeah, no, he's way too nice. Uh, that was just me. Uh, but we'll cut out that last sentence from me and then he'll just be pissed. Uh,

20. 47:39 – 50:37

    Quick-Fire Round

    1. HSHarry Stebbings47:39

       listen, I want to do a quick fire, so I say a short statement, you give me your immediate thoughts. Sound okay?

    2. ZPZach Perret47:43

       Yeah.

    3. HSHarry Stebbings47:43

       What book written before 1965 would you most recommend?

    4. ZPZach Perret47:47

       Um, The Wealth of Nations.

    5. HSHarry Stebbings47:50

       What's the most contrarian or unorthodox advice for founders listening?

    6. ZPZach Perret47:53

       Most of the stuff that the VCs tell you, don't do it. Um, uh, that's not to say, like, totally ignore them or, like, tell them they're wrong, but like-

    7. HSHarry Stebbings47:59

       What's the most dangerous trope that VCs often say?

    8. ZPZach Perret48:02

       Uh, so the OKR stuff, like putting OKRs in a business way too early is totally wrong. Um, putting revenue metrics on a company before they've achieved product market fit, totally wrong. Encouraging, um, founders to, like... I mean, this was addressed in the, the founder mode post that we talked about, but encouraging people to, like, hire great execs and then, like, let them have space, um, totally wrong. Don't, like, micromanage them too much, but, like, stay close. You need to stay in the details. You need to understand what's going on.

    9. HSHarry Stebbings48:26

       What have you changed your mind on most in the last 12 months?

    10. ZPZach Perret48:28

        Uh, so many things. We were talking about experience. Like, I've just... Like, I've been proven, um, time and time again that hiring for experience in certain pockets where, like, deep industry expertise matters is really, really important. Um, and so that's been, like, just really in my face a couple times.

    11. HSHarry Stebbings48:43

        What technology or advancement is most underrated?

    12. ZPZach Perret48:46

        The last time I had this like, oh my gosh, the internet, uh, like, just, like, this is the way that technology is going to go. Uh, like, there have been a, a few of them recently, like trying the Meta Ray-Bans. It's like, oh my gosh, like, this, this is a thing, uh, that's gonna happen. Like, I'm dealing with some of the AI stuff. It's been fascinating. Like, one of the first ones I had was, like, Shop Pay, where I showed up to this website and it had all my information, and I just clicked buy. Um, and it was like, ah, that's how the internet's supposed to work. I think that that innovation is underrated. Like, everyone's, like, cloned it now and, like, you know, um, PayPal's done it and Stripe's done it. Like, ev- everyone's, like, built the same thing. Um, uh, but the first time I saw that, like, they had this, just this incredible advantage, uh, relative to the rest of the market. So it was very cool.

    13. HSHarry Stebbings49:25

        If I ask you in five years time, where would you be exceptional for Plaid to be and where would be a fail, what would the answer be?

    14. ZPZach Perret49:33

        If anyone can get credit, uh, great access to credit based on the data that they have, uh, with them in their head, um, uh, like, you know, your, your, your transaction history so on and so forth, you have the ability to link that based on the data you have in your head, um, uh, that would be a, a huge unlock. Like, I think if financial fraud, which right now, at least in the US, is, like, growing at an increasing rate, um, if we can have it either flat or, uh, at least, like, growing at a decreasing rate minimally, ideally, like, declining, um, that would be huge. Uh, and so, and I think we can, we can very realistically do that. And I think if it's a, you know, a, a, a, a one-tap experience to, to apply for a loan, like, that's, that's the threshold that we have. That's the target that we have, is like, I want to apply for a loan. Click apply, do a face ID, um, great, your application's submitted. Like, that's the goal.

    15. HSHarry Stebbings50:19

        Zach, thank you so much for putting up with my variations and moving around schedules.

    16. ZPZach Perret50:24

        (laughs)

    17. HSHarry Stebbings50:24

        You've been fantastic and I've so enjoyed this, man.

    18. ZPZach Perret50:26

        Yeah, it's been super fun. Thank you for having me.

Episode duration: 50:38