Building A Big Company: Non-Obvious Insights

Dalton Caldwell 0:00 There's another misconception that happens that le- leads people to believe being the seventh-best player is okay, which is, well, if the winner is generating 500 million in revenue and we're generating 50 million in revenue, we're just worth, like, one-tenth of the winner. I don't think I've ever seen this thought backed up in fact.

Michael Seibel 0:22 I think that the assumption is you're gonna trend towards generating no revenue.

Dalton Caldwell 0:26 Yes. [laughs]

Michael Seibel 0:28 [laughs] [upbeat music]

Michael Seibel 0:32 This is Dalton + Michael. Today what we're gonna talk about are some non-obvious insights we've had on how you actually make a very large company.

Dalton Caldwell 0:43 I think what I'd like to explore is how maybe the advice that we give pre product-market fit is slightly different than the advice that we give post product-market fit. And I think sometimes founders-

Michael Seibel 0:56 Yep

Dalton Caldwell 0:56 ... uh, don't get this right. So-

Michael Seibel 0:58 Yeah. So I think-

Dalton Caldwell 0:59 Break it down

Michael Seibel 0:59 ... to start with, uh, disclaimer.

Dalton Caldwell 1:01 Yeah.

Michael Seibel 1:02 This is a nuanced topic.

Dalton Caldwell 1:04 [laughs]

Michael Seibel 1:05 This is the... This is a fantastic example-

Dalton Caldwell 1:08 Yes

Michael Seibel 1:08 ... of something that I'm happy to speak about on video-

Dalton Caldwell 1:10 Yes

Michael Seibel 1:10 ... and would never in a million years put on X or social media.

Dalton Caldwell 1:13 Yeah, yeah, yeah.

Michael Seibel 1:14 Which nuance doesn't work.

Dalton Caldwell 1:16 Yeah, yeah, yeah.

Michael Seibel 1:16 Even, even writing blog posts, it had to be a very long-

Dalton Caldwell 1:18 Yeah

Michael Seibel 1:19 ... long post.

Dalton Caldwell 1:19 This is tricky.

Michael Seibel 1:20 So this is super nuanced, and so the nuance here is pre PMF you just need an idea, and you just need to make something that people want. And so much of the advice is to stay out of midwit land.

Dalton Caldwell 1:34 Yes.

Michael Seibel 1:35 So much of the advice is-

Dalton Caldwell 1:36 Yes

Michael Seibel 1:36 ... to quiet your mind-

Dalton Caldwell 1:38 Yes

Michael Seibel 1:38 ... from all the distractions-

Dalton Caldwell 1:39 Yes

Michael Seibel 1:39 ... all the-

Dalton Caldwell 1:40 Yes

Michael Seibel 1:40 ... you know, super fancy-

Dalton Caldwell 1:42 Yes

Michael Seibel 1:42 ... strategizing you think you're doing-

Dalton Caldwell 1:44 Yes

Michael Seibel 1:44 ... and just, like, go do the thing.

Dalton Caldwell 1:45 Yes.

Michael Seibel 1:46 And that's how I would summarize lots and lots of the pre PMF advice, is just go do the thing.

Dalton Caldwell 1:50 Less strategy, more help the customer.

Michael Seibel 1:53 More just do things.

Dalton Caldwell 1:54 Yeah.

Michael Seibel 1:54 [laughs] Right? And those people win. Again, here comes the nuance.

Dalton Caldwell 1:58 Uh-oh.

Michael Seibel 1:59 What we will totally acknowledge is that post PMF, if all you do is that same pre PMF strategy, you can end up in a local maxima.

Dalton Caldwell 2:10 Yes. More common-

Michael Seibel 2:11 [laughs]

Dalton Caldwell 2:13 ... than I ever thought, and I think that there is this false belief that if I can make $10 million, I can make $100 million, I can make $500 million. And actually it u- often starts at $1 million.

Michael Seibel 2:29 Yep. The thing that makes me $1 million can make me a billion dollars.

Dalton Caldwell 2:33 What's unfortunate is how easy it is to verify that's not true.

Michael Seibel 2:39 [laughs]

Dalton Caldwell 2:40 Like, what's unfortunate is you can look at a lot of software companies and ask what did they do to make their first million, and is that how they're making all their money now-

Michael Seibel 2:47 Yep

Dalton Caldwell 2:47 ... and for just as many examples as you would find in the positive, you'd find in the negative.

Michael Seibel 2:52 Like Google monetizing search, monetizing search. Microsoft?

Dalton Caldwell 2:56 Yeah.

Michael Seibel 2:57 Completely different.

Dalton Caldwell 2:59 [laughs]

Michael Seibel 2:59 Completely different. Get into the nuance here.

Dalton Caldwell 3:02 Yeah. I think the way I, I would set up this is to say let's use the Facebook example.

Michael Seibel 3:08 Yes.

Dalton Caldwell 3:08 I like to use them just 'cause it's now, everyone knows it's a big company.

Michael Seibel 3:11 Yes.

Dalton Caldwell 3:11 But remember when it was not a big company.

Michael Seibel 3:13 Yes.

Dalton Caldwell 3:13 And at the time when it was a small startup, it had the best social network for college students.

Michael Seibel 3:22 Yes.

Dalton Caldwell 3:22 And it basically had a monopoly for people that had a .edu email address.

Michael Seibel 3:27 Yes.

Dalton Caldwell 3:27 And at the time, you had to be a student at one of the universities that they supported.

Michael Seibel 3:32 Yep.

Dalton Caldwell 3:32 Otherwise, you couldn't use it.

Michael Seibel 3:33 Nope.

Dalton Caldwell 3:33 And that's part of what made it cool was there were no parents on it. There were no kids on it.

Michael Seibel 3:37 It was a feature.

Dalton Caldwell 3:38 It was a feature that was super unique.

Michael Seibel 3:40 It was a feature.

Dalton Caldwell 3:40 It also restricted you to only your university.

Michael Seibel 3:43 Yes.

Dalton Caldwell 3:43 And so they built this super sticky product, but at the time, the conventional wisdom is this is some college kid niche social network.

Michael Seibel 3:51 How can that be big business?

Dalton Caldwell 3:52 How can that be a big business?

Michael Seibel 3:54 Yeah.

Dalton Caldwell 3:54 This is by its very definition niche.

Michael Seibel 3:56 Yes.

Dalton Caldwell 3:57 And then if we look back in time, the strategic decision that was not hill climbing, was not, you know, hitting a local maxima, was to first allow high school students to come in.

Michael Seibel 4:08 No. First it was the... It was first the companies that a lot of the Ivy League kids went to work at.

Dalton Caldwell 4:15 That's before high school kids?

Michael Seibel 4:16 That was before high school kids.

Dalton Caldwell 4:17 Okay. I-

Michael Seibel 4:17 Yes. It was, uh, it was, like, Accenture.

Dalton Caldwell 4:19 Oh, sure.

Michael Seibel 4:20 Yeah. It was some of the [laughs] ... I remember those were some of the first e-

Dalton Caldwell 4:23 So-

Michael Seibel 4:23 Some of the first non edu's that came up. Yeah.

Dalton Caldwell 4:26 So Accenture was in.

Michael Seibel 4:28 [laughs]

Dalton Caldwell 4:28 That's, uh, you know, I think-

Michael Seibel 4:29 Accenture got in before some c- high school colleges got in [laughs]

Dalton Caldwell 4:31 That's a departure from the original vision. Then high school kids was a really big departure.

Michael Seibel 4:36 Yes, big departure.

Dalton Caldwell 4:37 And then the decision to allow all people to sign up-

Michael Seibel 4:39 Yes

Dalton Caldwell 4:39 ... I would argue is a great example of a big strategic bet-

Michael Seibel 4:43 Yes

Dalton Caldwell 4:44 ... that was not related to just hill climbing what they were doing.

Michael Seibel 4:47 No.

Dalton Caldwell 4:48 Then there was the big strategic bet to do mobile.

Michael Seibel 4:50 Yes.

Dalton Caldwell 4:51 Which was betting the, betting the farm on the mobile app was a big strategic bet.

Michael Seibel 4:55 'Cause all the money they were making was on web at the time.

Dalton Caldwell 4:57 Right?

Michael Seibel 4:58 Yeah.

Dalton Caldwell 4:58 Then there was the Facebook App Store strategic bet.

Michael Seibel 5:01 Big bet.

Dalton Caldwell 5:01 There was the Facebook phone strategic bet, which didn't work out. Like, there's been-

Michael Seibel 5:05 Instagram, which is basically the company now.

Dalton Caldwell 5:08 Yes, it's-

Michael Seibel 5:08 [laughs]

Dalton Caldwell 5:08 ... saved the company. With hindsight, you can see all these times where the founder had to make a decision that was not hill climbing-

Michael Seibel 5:16 Yes

Dalton Caldwell 5:16 ... making the product better.

Michael Seibel 5:18 Yes.

Dalton Caldwell 5:18 It was actually making kind of a crazy bet and betting the company on something.

Michael Seibel 5:23 Yes.

Dalton Caldwell 5:23 And with hindsight, those ones worked out.

Michael Seibel 5:25 Yes.

Dalton Caldwell 5:25 But remember back in 2005, 2006, there were a bunch of VC-funded social networks.

Michael Seibel 5:31 Yes.

Dalton Caldwell 5:31 i5.

Michael Seibel 5:32 Yep.

Dalton Caldwell 5:33 Tagged.

Michael Seibel 5:34 Yep.

Dalton Caldwell 5:34 And for whatever reason, those companies didn't make these types of moves. Or to the extent they made strategic moves, those moves did not work out.

Michael Seibel 5:43 A takeaway from this story is if you're going to build a very, very large and successful social network, probably the best way to monetize it is through advertising. You have to figure out how to be huge, and there are a lot of other network effects that come in being huge. But if we just look at the business perspective, right, the value to an advertiser for everyone being in one place and the amount of premium you can chargeMassive. You don't get that value if you're the

Michael Seibel 6:13 seventh place player. I'm sure there are a lot of other product reasons why this whole path made a lot of sense, but the business reason effectively enabled to make Facebook to make the amount of revenue it does. And I think that sometimes when we're talking to startups, I get the impression they care far more about what they believe their next fundraising milestone is than what number they'd have to hit to IPO, what number they'd have to hit to be a $50 billion valuation company in the public market, what company they'd have to hit to be $100 billion. And sometimes you are inadvertently making choices that reduce your chances of actually building a valuable company. One of the areas that we see this a lot are companies that kind of have to bundle.

Dalton Caldwell 6:58 Yeah.

Michael Seibel 6:58 So look at HRISs, right? And it's just like whatever reason-

Dalton Caldwell 7:03 'Cause why would you wanna buy 17 pieces of HR software, right? [laughs]

Michael Seibel 7:06 [laughs] Like the market wants bundles, and we see companies all the time, like, build a best-in-class product and then struggle with, do I do more? Do I bundle?

Dalton Caldwell 7:17 Yeah.

Michael Seibel 7:18 Hell, we're seeing this with bigger players now, right? If you're Zoom, if you're Slack, right, you have these decisions, like, we got to a certain size. Do we build the bundle?

Dalton Caldwell 7:26 Yep.

Michael Seibel 7:26 If we don't, can we really-

Dalton Caldwell 7:28 Well, remember, Slack-

Michael Seibel 7:29 ... grow the next level?

Dalton Caldwell 7:29 ... is Salesforce now. They got acquired. [laughs]

Michael Seibel 7:31 Well-

Dalton Caldwell 7:32 So it's part of a bundle.

Michael Seibel 7:33 Yeah. [laughs]

Dalton Caldwell 7:33 Another bundle. Yeah, yeah, exactly, right?

Michael Seibel 7:35 These are conversations that we never wanna have with a pre-product-market-fit company, right?

Dalton Caldwell 7:41 Yeah. If, if- [laughs]

Michael Seibel 7:43 [laughs]

Dalton Caldwell 7:43 Again, let's, let's use a specific example. Let's say someone wants to build a new Cursor competitor.

Michael Seibel 7:49 Yes.

Dalton Caldwell 7:50 Pre-PMF, it's like, well, have you talked to your users?

Michael Seibel 7:53 Yeah.

Dalton Caldwell 7:53 Like, does anyone want this?

Michael Seibel 7:54 Yes.

Dalton Caldwell 7:54 Is this better than Cursor?

Michael Seibel 7:55 Yes.

Dalton Caldwell 7:55 Like, it's just the fundamentals. Any midway strategizing about whatever is irrelevant if you have no users.

Michael Seibel 8:02 If your product is worse than Cursor-

Dalton Caldwell 8:03 If it's bad

Michael Seibel 8:03 ... then nobody [laughs] uses-

Dalton Caldwell 8:04 Like, if no one will use it-

Michael Seibel 8:05 [laughs]

Dalton Caldwell 8:06 ... you have a problem.

Michael Seibel 8:06 Yes.

Dalton Caldwell 8:07 You know, if Claude Code is just way better, you're-

Michael Seibel 8:09 Game over.

Dalton Caldwell 8:09 Game over.

Michael Seibel 8:09 Yes.

Dalton Caldwell 8:10 But if you were sitting here right now and watching this video, and you had raised a bunch of money or a Series A-

Michael Seibel 8:16 Mm-hmm

Dalton Caldwell 8:16 ... and you were the seventh most popular-

Michael Seibel 8:18 Mm

Dalton Caldwell 8:19 ... Cursor or Claude Code competitor, and you've done no strategic thinking-

Michael Seibel 8:24 Yeah

Dalton Caldwell 8:25 ... about what the plan is-

Michael Seibel 8:27 Yeah

Dalton Caldwell 8:28 ... I think you're gonna have a bad time, right?

Michael Seibel 8:29 Yes. And I think that there's another misconception that happens that le- leads people to believe being the seventh best player is okay, which is, well, if the winner is generating 500 million in revenue, and we're generating 50 million in revenue, we're just worth, like, one-tenth of the winner. And I don't think I've ever seen this thought backed up in fact. I think that the assumption is you're gonna trend towards being, generating no revenue.

Dalton Caldwell 9:00 Yes. [laughs]

Michael Seibel 9:02 [laughs] And I guess there are some markets where there's six winners, but eh.

Dalton Caldwell 9:07 [laughs]

Michael Seibel 9:07 And so what's interesting is in your example, right, if you're the sixth best player, like, you must be obsessed about winning the whole game.

Dalton Caldwell 9:16 Or just having a move. There's gotta be a move.

Michael Seibel 9:18 Or, yeah, or playing a different game.

Dalton Caldwell 9:19 Yeah.

Michael Seibel 9:19 Yeah. We can win that one. And we, I think we encounter a lot of YC founders who, um, and a lot of founders in general, who are kind of like, "But isn't 50 million in revenue sufficient? Like, haven't I won?"

Dalton Caldwell 9:31 Yeah.

Michael Seibel 9:31 Like, "Isn't the finish line behind me? Like, I got here. If I got to 50, it's a guarantee I'm gonna get to 500, right?" One of the things I say to a lot of founders is, "What do you think is the failure rate for a Series B company?" Because, like, I think in their minds, before I ask the question, they think every Series B company wins. [laughs] And then after I ask it, they're like, "I guess mathematically that wouldn't work." [laughs]

Dalton Caldwell 9:54 Yeah. So-

Michael Seibel 9:55 Not everyone wins. When they hear stuff like, ah, 80, 90%, they're like, "Oh."

Dalton Caldwell 10:00 Well, what's funny about this nuanced point we're making is I could see a lot of people being like, "Yeah, totally guys, I agree with you, but why aren't you doing all that during the batch?" Again, I, I don't think people recognize-

Michael Seibel 10:11 No

Dalton Caldwell 10:11 ... how this style of thinking-

Michael Seibel 10:13 No

Dalton Caldwell 10:13 ... is literally poison when you're trying to just ship a product, but is absolutely necessary in the pre-product-

Michael Seibel 10:18 Well, I'd often attack it in this way. I think most of the time in your pre-product-market fit, you're still trying to learn what the customer wants. I would almost argue you're still in the fundamental kind of let me learn what the hell's going on. I think that, like, when you're trying to make these high strategic moves, it's very helpful that you know some stuff. [laughs] It's very helpful that you have a mental model of the customer, you have a mental model of their needs, you have a mental model of why your product helps them or not. Like, and these are things that you're still playing with pre-product-market fit. This kind of thinking creates paralysis in a pre-product market.

Dalton Caldwell 10:51 Yes.

Michael Seibel 10:51 Like, you know, instead of writing code today and talking to users, let's spend eight hours talking about strategy, right? Like [laughs]

Dalton Caldwell 10:58 Well, again, to go back to the Facebook example-

Michael Seibel 11:00 [laughs]

Dalton Caldwell 11:01 ... all of the strategic work Zuckerberg did was super helpful with a guy with 100 million MAU.

Michael Seibel 11:06 [laughs] Yeah.

Dalton Caldwell 11:08 Like, it's like, cool man, you-

Michael Seibel 11:09 Yeah.

Dalton Caldwell 11:09 Here are the keys. You get to-

Michael Seibel 11:10 Yeah

Dalton Caldwell 11:10 ... spend a lot of time pontificating.

Michael Seibel 11:12 Yes.

Dalton Caldwell 11:12 I mean, some, some guy-

Michael Seibel 11:15 Yeah

Dalton Caldwell 11:15 ... sitting in his, an apartment strategizing about the future of social networking.

Michael Seibel 11:19 Yeah.

Dalton Caldwell 11:19 That, that's not someone in a good position-

Michael Seibel 11:21 No

Dalton Caldwell 11:21 ... to do this type of analysis.

Michael Seibel 11:23 When Zuck's got 2,000 Harvard kids, that's not the time.

Dalton Caldwell 11:27 Yeah.

Michael Seibel 11:27 Yeah. I love the point you made in the beginning, which is that, like, this gives us a little bit more time to flesh these ideas out. I think another idea that you introduced to me, which is I think is a basic finance idea that I didn't fully embrace at first, is just comps. The number of times I'm talking to founders, and I'm just like, "What company do you comp yourself to?" 'Cause if you're trying to think strategically, like what, what does good look like? Where are we aiming for? And the number of times people will be like, "Oh, well, this company has a billion-dollar valuation. I'm comping myself to them." And I'm like, I, I always laugh now 'cause I'm like, you have a sea of public startups that you could... It's like, you know-I don't wanna learn anything about playing basketball from Michael Jordan because I like this guy who plays on Duke right now.

Dalton Caldwell 12:18 [laughs]

Michael Seibel 12:18 And I'm like, "All right, good. I like the Duke guy. He's great. Like, maybe he'll make the NBA. Like, can we talk about Michael Jordan for a sec?"

Dalton Caldwell 12:26 [laughs]

Michael Seibel 12:27 And he's like, "Oh, but Michael Jordan's old." And I'm like, "But he won. Go pick a newer winner. Let's talk about LeBron James. Can we just talk about someone who's really put points on the board, and we're not judging them on what they might accomplish in the future?"

Dalton Caldwell 12:41 But founders resist this.

Michael Seibel 12:42 I, I-

Dalton Caldwell 12:42 Like, those parts are very cool Part of it, or at least in my own experience, is it seems so foreign to go public or to know anyone that did. It just felt like being like, let's talk about the astronaut who walked on the moon. It just didn't seem real.

Michael Seibel 12:56 There.

Dalton Caldwell 12:56 Whereas now it seems completely real, but we're in the bubble, man. So again, I, I think, I think that's my steel man on why people-

Michael Seibel 13:06 I hear that.

Dalton Caldwell 13:06 Go ahead.

Michael Seibel 13:06 But I think, you know, it's funny, we've gotten to do a number of YC talks with Tony from DoorDash, and, like, I think he was thinking earlier than anyone ever believed that, like, "I wanna do delivery better than Amazon."

Dalton Caldwell 13:22 Before he ever had the right to-

Michael Seibel 13:24 Yeah

Dalton Caldwell 13:24 ... you know, [chuckles] the privilege to think that way, I think he was thinking that way, and that's just a choice, right?

Michael Seibel 13:31 Yeah.

Dalton Caldwell 13:31 Like, he could have only comped himself to Uber and Postmates.

Michael Seibel 13:39 Yeah. You choose who your heroes are.

Dalton Caldwell 13:41 Yeah.

Michael Seibel 13:41 And I also think it's more exciting, like, it's scarier for sure, but it's more exciting to compete against the big, big, big players. All right, last dangerous topic. So I, I love, I love talking about this. So during early-stage fundraising, we often make fun of investors who say, "What are you gonna do when Google builds your thing?" It's often a sign of a unsophisticated investor.

Dalton Caldwell 14:09 I think it's because we heard that so much when we were founders.

Michael Seibel 14:11 Yes.

Dalton Caldwell 14:12 Well, also, there's no right answer.

Michael Seibel 14:14 It's... Yeah, yeah. It's like, yes, if, if Mark decides to directly compete with you and ignore everything else-

Dalton Caldwell 14:20 Yeah

Michael Seibel 14:20 ... how would you win? [laughs] It's like, it almost feels like an unfair question. But there is a stage of company where the Googles, the Amazons, the Salesforces, the, the Microsofts will take interest. I heard a great story from a YC company doing a CRM, and he was like, "Have you ever heard of Microsoft Dynamics?" I was like, "I don't know about random Microsoft products." He's like, "Oh yeah, it's their CRM that's taking, like, customers out of Salesforce's hands left and right." And I'm sitting here like, how many of our founders think Salesforce is one?

Dalton Caldwell 14:56 Yeah.

Michael Seibel 14:57 And Microsoft's like, "Oh, this is around the time, you know, in the last five years. Let's, let's start [both laughing] We could do that." Or, you know, on a, on a classic example, right, AWS.

Dalton Caldwell 15:11 Yeah.

Michael Seibel 15:11 Damn near a decade they were the only serious player.

Dalton Caldwell 15:15 Yep.

Michael Seibel 15:15 And Google, and then Microsoft's like, "Oh, yeah, we could do that." And, like, the crazy thing is, like, we can hire some of the people who built your thing-

Dalton Caldwell 15:25 For sure

Michael Seibel 15:25 ... and ask them, "Hey, now that you've built it, how would you do it better the next time?" And so what seems like a dumb question from an early-stage founder, how should a later-stage founder think about these big guys, 'cause they do compete.

Dalton Caldwell 15:36 I think it's worth thinking about from your customer's perspective. You know, just go through the laundry list. How hard would it be for someone to switch? Are there non-obvious reasons that they wouldn't wanna switch? I, I think just being really honest with yourself about those things, um, is probably a good idea. Like, in the case of Slack, I think what I heard, again, this is not first party, this is just third party, I think a lot more people, uh, were willing to use Teams and other stuff than Slack.

Michael Seibel 16:05 Mm-hmm.

Dalton Caldwell 16:05 And so it was not as sticky as they had hoped, which is part of why they needed to get acquired, I believe, that Microsoft actually did damage to Slack, and that's why they got acquired, was my understanding.

Michael Seibel 16:14 It's funny. So I talked to somebody who was, like, a product lead at Microsoft, and he was just like, "Look, like, we could bundle Teams, and, like, we could effectively almost default roll it out to all Microsoft folks, where every one of those deals, Zoom would have to get people to adopt it, upsell them, figure out some IT thing, do all the contracting." And Mark's telling me just like, "This is the next product in the suite."

Dalton Caldwell 16:44 Yeah.

Michael Seibel 16:45 A question that is completely irrelevant to most YC founders for their whole career is if you're a product like Slack with the amount of kind of takeoff that you had, or Zoom with the amount of takeoff that you had, was there a way to compete against Office? And, like, one of the things I often think about is, like, there is a point where you might actually have to go at these big guys' throats.

Dalton Caldwell 17:09 I mean, okay, one more time to go, go back to the Facebook thing.

Michael Seibel 17:12 Yeah.

Dalton Caldwell 17:13 Google decided to kill Facebook with Google+.

Michael Seibel 17:16 Yep.

Dalton Caldwell 17:16 And they put, like, half the company on it.

Michael Seibel 17:18 Yep.

Dalton Caldwell 17:18 And it totally failed, but it's not 'cause they didn't try.

Michael Seibel 17:21 Nope. Nope. [laughs]

Dalton Caldwell 17:23 It was not...

Michael Seibel 17:25 No.

Dalton Caldwell 17:25 There was a very serious effort-

Michael Seibel 17:27 Yes

Dalton Caldwell 17:27 ... by Google to bury Facebook.

Michael Seibel 17:29 Yeah.

Dalton Caldwell 17:29 It just didn't work out.

Michael Seibel 17:31 It's funny 'cause it's kinda like, I don't know, I think about the ocean and just different sized fish, and, like, when you're a fish this small, you know, nobody-

Dalton Caldwell 17:39 Yeah

Michael Seibel 17:39 ... the great white doesn't care. But y- as you get bigger, [laughs] you've got bigger competitors, and I think that I almost wish that more founders thought of that as empowering. I thought of more founders like, "Hey, now I get to competing against the big guys," 'cause it's not like the big guys have the better product often than not.

Dalton Caldwell 17:58 Yeah.

Michael Seibel 17:58 Right? Like, you... Like, often by competing against the big guys, you can bing, bring a better product to market, and, like, I'll use DoorDash as an example. I've been an Amazon user for 25 years, and I would've said I've loved Amazon top five products in my life.

Dalton Caldwell 18:17 Hmm.

Michael Seibel 18:18 For maybe 20 of them. And something started happening about five years ago where I would do an Amazon search-

Dalton Caldwell 18:25 I know, yeah

Michael Seibel 18:26 ... and it's like, it's-

Dalton Caldwell 18:28 It's, it's hard-

Michael Seibel 18:29 [laughs]

Dalton Caldwell 18:29 ... not to buy junk.

Michael Seibel 18:31 [laughs] Yes. And I'm like-

Dalton Caldwell 18:32 You have to really try to not buy trash on Amazon. Like, the whole thing is set up to buy trash.

Michael Seibel 18:39 Click the right button, yes. [laughs]

Dalton Caldwell 18:41 Yeah. You almost need to dis- do discovery outside of Amazon.

Michael Seibel 18:44 [laughs]

Dalton Caldwell 18:45 Deep link to the thing you wanna buy, and otherwise, stay the hell out of there.

Michael Seibel 18:48 Yes.

Dalton Caldwell 18:48 It's all bad.

Michael Seibel 18:49 Well, and, and the terrorism of getting... It's one thing when you sign up for some service online and it doesn't work out, and you can just unsubscribe. The terrorism of getting something physical-

Dalton Caldwell 18:59 Ugh

Michael Seibel 18:59 ... in your home, and you're just like, "Okay, if I have to return it, that's just even more time."

Dalton Caldwell 19:05 Yeah.

Michael Seibel 19:05 But then less, and like, or, or just like silly things like the photo was the wrong size, so it's like Amazon started putting this, "This product is often returned."

Dalton Caldwell 19:18 [laughs]

Michael Seibel 19:18 And I'm like, "Why is it in the result?" [laughs] Like, like, like, I have to scroll down to learn. [laughs]

Dalton Caldwell 19:25 I'm sure some PM is gonna get sent this video. The email from the boss, "Have you seen this?"

Michael Seibel 19:30 [laughs]

Dalton Caldwell 19:30 "Please consider, you know, investor guys talking about it." You know? [laughs]

Michael Seibel 19:35 Well, then the other thing is the, the sponsor products. Like, Google taught me that, like, sponsored stuff's at the top-

Dalton Caldwell 19:42 Yeah

Michael Seibel 19:42 ... and you scroll past it, and then, like, you get the real stuff for a while. And like, you should be able to tell the difference between ads and not ads. Amazon's taught me, like, I don't even know what's going on.

Dalton Caldwell 19:53 Going on.

Michael Seibel 19:53 Like, is that an ad? Is that not an ad? Are those reviews fake? Are they real? I have to have a plugin to tell me whether the reviews are real or not. [laughs]

Dalton Caldwell 20:00 [laughs]

Michael Seibel 20:01 I'm like... On the other hand, DoorDash, I c- I can't even believe I'm saying this. I'm like, because DoorDash fulfills from the local stores, and, like, it's very hard for random spam shit products to-

Dalton Caldwell 20:15 Yes

Michael Seibel 20:15 ... get distribution in local physical stores. When I order on DoorDash, I feel safer.

Dalton Caldwell 20:21 You get the thing.

Michael Seibel 20:23 Yeah. And it's like, it's a thing that kind of is, like, it's gonna... It's a brand I've probably heard of. [laughs]

Dalton Caldwell 20:29 Yeah.

Michael Seibel 20:29 And it's gonna work. And it gets there faster. And I feel such, like, a rich douchebag as I'm sitting here like, "I don't need these sneakers in an hour." Like, I know-

Dalton Caldwell 20:40 Yeah

Michael Seibel 20:42 ... but I'm not even using DoorDash 'cause I need them in an hour.

Dalton Caldwell 20:45 Yeah.

Michael Seibel 20:45 I'm just using it 'cause I trust it.

Dalton Caldwell 20:46 Because it's a bigger thing.

Michael Seibel 20:47 Yeah. Ugh, right? [laughs] You know, it's like I feel uncomfortable. I, I mean, Amazon Prime, Amazon-

Dalton Caldwell 20:53 Yeah

Michael Seibel 20:53 ... I got all the Amazon stuff. [laughs]

Dalton Caldwell 20:55 [laughs]

Michael Seibel 20:55 I got Echos throughout my whole house. But I'm like, "Ugh, very interesting. DoorDash is competing against Amazon."

Dalton Caldwell 21:05 Yep.

Michael Seibel 21:05 They've decided, like, we're gonna take on the big boys. And the big boys maybe are a little more vulnerable than they look.

Dalton Caldwell 21:11 And what's funny, to cap this off, is that was always the plan. Like, the comps were, you said this a minute ago, but the plan was always to imagine the size the logistics business for all products was bigger than food only.

Michael Seibel 21:25 But first, you know what he had to do? He had to get someone a fucking burrito in Palo Alto.

Dalton Caldwell 21:29 Yep.

Michael Seibel 21:29 Right? [laughs] Like, you don't-

Dalton Caldwell 21:30 Yep

Michael Seibel 21:30 ... you don't get to have this conversation without how do I get someone a burrito in Palo Alto?

Dalton Caldwell 21:35 Yep.

Michael Seibel 21:35 So use this advice correctly. Don't come back to us. [laughs]

Dalton Caldwell 21:41 [laughs]

Michael Seibel 21:41 Don't yell at us. We don't wanna hear, you know, your pre-launch companies, how do I take on Google? [laughs] But if you do find yourself in a little bit of a rut in your post product-market fit, maybe you gotta be more ambitious.

Dalton Caldwell 21:55 Which is counterintuitive.

Michael Seibel 21:57 All right.

Dalton Caldwell 21:58 All right.

Michael Seibel 21:58 Thanks a bunch.

Dalton Caldwell 21:59 Thank you, Michael. Appreciate it. [outro music]