Kunal Shah on winning in India, second-order thinking, the philosophy of startups, and more

1. 0:00 – 4:22

   Kunal’s background

   1. LRLenny Rachitsky0:00

      Microsoft, Adobe, Alphabet, IBM, Palo Alto Networks, even Starbucks. The CEOs of these companies were all born in India and emigrated to the US.

   2. KSKunal Shah0:09

      A lot of CEOs have done well because they follow the ... of the founders quite well. These are the principles that were given to me and I'm gonna sustain this and make it even bigger.

   3. LRLenny Rachitsky0:16

      I wanna keep talking about India and how it's different and how to build products that are successful in India.

   4. KSKunal Shah0:21

      No Indian has ever been paid an hourly salary in their entire life. The concept of time is not the same.

   5. LRLenny Rachitsky0:27

      What do you see as the biggest opportunity for Indian startups?

   6. KSKunal Shah0:30

      India is changing because now, for the first time, we are seeing founders being respected and unicorns being celebrated. We have a National Startup Day and probably the first generation that will have to prove ourselves to be very large profitable companies. I wouldn't want to be anywhere else and building.

   7. LRLenny Rachitsky0:46

      (instrumental music) Today my guest is Kunal Shah. Kunal is one of the most well-known and respected entrepreneurs and product leaders in India and around the world. He shares endless wisdom on Twitter and LinkedIn where he's got over one million followers. He's the CEO and founder of CRED, a fintech startup based in India which was last valued at over $6 billion and as of a couple years ago, processed over 20% of all credit card bill payments in India. Prior to CRED, he founded three other startups, including FreeCharge which he sold for over $400 million to Snapdeal. Kunal is a deep thinker, both about product and about life. His background is actually in philosophy which comes across very clearly when you hear him share his advice. In our conversation, we get deep into what makes working and building in India different from the US markets and other markets, including why trust is so essential and why so many people are so much more risk-averse in India. We talk about the biggest challenges and opportunities within the India market, why there are so many successful Indian immigrants in CEO roles across tech and what we can learn from that. Also, why companies in India can quickly grow DAOs but not ARPUs and what that means for building products in India. We also talk about how to stay curious and open-minded and the power of second order thinking, also stories of failure and lots of contrarian takes and so much more. If you enjoy this podcast, don't forget to subscribe and follow this podcast on your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously. A big thank you to Sayan Maity for making the connection to Kunal. With that, I bring you Kunal Shah after a short word from our sponsors. This episode is brought to you by WorkOS. If you're building a SaaS app, at some point, your customers will start asking for enterprise features like SAML authentication and SCIM provisioning. That's where WorkOS comes in, making it fast and painless to add enterprise features to your app. Their APIs are easy to understand so that you can ship quickly and get back to building other features and hundreds of other companies are already powered by WorkOS, including ones you probably know like Vercel, Webflow, and Loom. WorkOS also recently launched AuthKit, a complete authentication and user management service. It's essentially a modern alternative to Auth0, but with better pricing and more flexible APIs. AuthKit's design is stunning out of the box and you can also fully customize it to fit your app's brand. It's an effortless experience from your first user all the way to your largest enterprise customer. Best of all, AuthKit is free for any developer up to one million users. Check it out at workos.com/lenny to learn more. That's workos.com/lenny. This episode is brought to you by Orb. As a business, you care about revenue, but as a product team, the last thing you wanna do is delay a product launch or a pricing change because your team has to rebuild billing from scratch. Orb is a flexible usage-based billing engine that lets you evolve your pricing with ease. The fastest growing product teams at companies like Vercel and Replit trust Orb to power their pricing changes and launches. Use Orb to ship products faster, stop worrying about billing, and evolve pricing with ease and control. Check it out at withorb.com/lenny and skip the line for a demo or sandbox by using promo code Lenny. That's withorb.com/lenny.

2. 4:22 – 11:00

   The Delta 4 framework

   1. LRLenny Rachitsky4:25

      Kunal, thank you so much for being here and welcome to the podcast.

   2. KSKunal Shah4:29

      Lenny, thank you so much for having me and a huge fan of everything that you do and, and, uh, like I said before, India is a huge beneficiary of what, uh, stuff you do. We, we are all people who have learned the art of product by just figuring it out and watching some content here and there and reading some stuff. So kudos to everything that you do. And like I said earlier that you do the fabulous job of taking the information asymmetry of the art of product and kind of make it accessible to many of us across the world. So thank you.

   3. LRLenny Rachitsky5:03

      Wow. I, I really appreciate that. This is already feeling great to me. I have a huge... So it turns out this podcast has a huge audience in India, as do you. And so I feel like this conversation is gonna be really special and really meaningful to a lot of people. I wanted to start with something very tactical. There's a product framework that you came up with that I absolutely love and I've shared it with at least 30 founders over the last couple years, and this is actually how I discovered you initially is I heard about this thing and I'm like, "Who's this guy Kunal Shah?" And look at us now, chatting. Could you explain this framework briefly and then just how you've used it or how you recommend people apply it? Oh, and by the way, it's called Delta Four. I don't know if I even said the name.

   4. KSKunal Shah5:47

      Yeah. It's, it's called the Delta Four framework but I think it's actually quite simple if you think about it. A lot of people say that your product has to be 10X better and it's not very measurable. Uh, you don't know if you're 10X better or not, uh, uh, unless you're delusional. And the trigger for me was actually...Well, I'm the unusual tech founder in India. I'm a philosophy... I'm the only humanities, philosophy major founder in India, uh, who's got into tech and, and, uh, I often wonder that most people who were my peers or people who were ahead of me were significantly smarter academically or otherwise and, and why did I become successful with my first startup, FreeCharge, which I exited in 2015 for merely, like, $450 million? And I was like, "What would make this happen?" Because I would not qualify into this super league of really top IIT rankers that exist in India. And, and that got me on to this philosophical quest to find out what makes things successful. So the simple framework is, like, uh, examples that I give often is that imagine, uh, the old way of taking a cab ride and an Uber, right? And if I asked you, "Give me the s- score of efficiency on Uber," and let's say getting the old cab, what would you say, Lenny? I'm curious. Like, out of 10.

   5. LRLenny Rachitsky7:00

      Yeah. I'd give a cab, like, a three and then Uber, like, a, yeah, like, a nine.

   6. KSKunal Shah7:05

      Yeah. So every time you see that the, the product efficiency delta is greater than or equal to four, three things happen. Uh, it is irreversible. Second is that you have very high tolerance for it to fail at, like... If Uber fails a little bit, you... will you say, "Oh my God, that I'm going to, like, really stop using it"? No. And the third thing is that, uh, I, I call it the, uh, UBP, unique brag-worthy proposition. So every time humans unlock a delta four product or service, they cannot stop talking or sharing about it. And therefore all delta four products will naturally have lower CACs or sometimes zero CACs because people, humans... And, and think about then how you discovered Uber. Definitely not through an ad. Definitely not through some performance marketing here and there. Somebody showed you the demo and you were like, "My God, this is crazy." And that's what I'm seeing right now what's happening with everything on OpenAI and everything that is happening around LLMs feels like magic and it's kind of delta four because the efficiency of doing things before and after is now showing that. But there's... The failure is the real problem, right? And, and making everything tech does not make things more efficient. Let's take about a proper example. Uh, buying a suit for you, uh, online versus offline. All tech, cool stuff, all the s- features built in. Uh, what would you say the efficiency of buying a suit online is versus let's say buying a suit offline?

   7. LRLenny Rachitsky8:35

      I've actually done that and it was a terrible... (laughs) it did not fit at all. Uh, and so, like, it's efficient, but the, uh, the end result was not... Is I... It's probably often not, not great. So it's probably not worth it, yeah.

   8. KSKunal Shah8:46

      Overall efficiency score, what would you give?

   9. LRLenny Rachitsky8:48

      Uh, of, uh, buying a suit online?

   10. KSKunal Shah8:50

       Yeah. Ours is offline.

   11. LRLenny Rachitsky8:52

       Like, I'd probably give it five and five.

   12. KSKunal Shah8:55

       Yeah.

   13. LRLenny Rachitsky8:55

       Like, on the offline is actually probably better experience.

   14. KSKunal Shah8:58

       Yeah.

   15. LRLenny Rachitsky8:58

       I'd maybe give it a seven.

   16. KSKunal Shah8:59

       That's, that's crazy, right? Because you've broken the principle this is a tech product, but the efficiency is better offline.

   17. LRLenny Rachitsky9:05

       Mm-hmm.

   18. KSKunal Shah9:06

       Uh, and, and therefore the... when the delta is lesser than four, uh-

   19. LRLenny Rachitsky9:11

       Mm-hmm.

   20. KSKunal Shah9:11

       ... what you will discover is that it is irreversible. You will not see people, uh, uh, bragging about it, right? Uh, and you have zero tolerance for it. So you are never going to buy a suit online, I can tell you that right now, right?

   21. LRLenny Rachitsky9:25

       No.

   22. KSKunal Shah9:25

       So I think it's a simple framework. I believe that if many companies applied... So I know now many VCs, uh, in the US, uh, use this as part of the training program for the analysts. I, I know about it that, uh, somebody in Sequoia mentioned this to me that they have this part of the thing. But, uh, in, in India, we are, like, not still applying many of these things. Uh, I think it's a simple framework to at least know. And you can apply this to features, you can apply this to products, you can apply that to business. Uh, uh, and, and, uh, oftentime... And this is a longer concept. We can talk about it in many ways because it's... it's derived out of some study around entropy and something about evolutionary biology, which is the root of how I discovered and thought about delta four, that when does a species get disrupted or... and what is entropy and, uh, a- and why does low entropy require growth of high entropy? And, like, it's a... i- i- it's a, it's a day-long podcast on its own, so some other time.

   23. LRLenny Rachitsky10:21

       Okay. We'll save that for a future follow-up, just diving in on the psychology of delta four.

   24. KSKunal Shah10:25

       Sure.

   25. LRLenny Rachitsky10:25

       Just to kind of summarize this, 'cause I think it's a... such a powerful framework and I find it useful to convince founders why their product isn't taking off. They may feel like this is better than... Like, the classic example is a better Excel. "Look, this is so much better than Excel. It can do all these things. You don't have to learn all these formulas." But the trick here, and that I love, is just what would people rate the existing solution, one to 10? What would they rate your solution, one to 10? And it has to be four points higher. Otherwise, no one, no one's gonna pay attention. And I think, I think it's pretty simple. People are busy. They have enough things to do. They have enough products and apps. They're not gonna take the time to really dig into something if it's not that much better.

3. 11:00 – 19:55

   The success of Indian CEOs in the U.S.

   1. LRLenny Rachitsky11:00

   2. KSKunal Shah11:00

      Absolutely.

   3. LRLenny Rachitsky11:01

      Okay, I'm gonna go in a totally different direction. I wanna talk about Indian CEOs in the US. Okay. So today, the CEOs of Microsoft; Alphabet; Adobe, which is a $250 billion company, turns out; uh, IBM, which is $170 billion company; Palo Alto Networks, which is $100 billion company; even Starbucks, also $100 billion company, I always look that up; and then also Twitter, before Elon took over Twitter; the CEOs of these companies were all born in India and emigrated to the US. And I might be wrong, but I think this is the largest ethnic group of CEOs of tech companies other than just White dudes in the US.

   4. KSKunal Shah11:40

      Yes. Yeah.

   5. LRLenny Rachitsky11:41

      Okay. So I'm curious why you think Indian immigrants are so successful in business and in tech in the US, especially in these very high positions. And then as... I'm most curious, just what can we learn from that? What can we learn from their success?

   6. KSKunal Shah11:55

      Yeah. It's a, it's a great question. I often, often wonder about it, and I have had the good fortune to meet a fair bunch of these individuals and had a chance to really explore with them what really went on.So there are few things that pop out and, and, and again, these are all conjectures which I can't prove in any ways, but it, it's a, it's a thought experiment anyways to talk about these things. First is, uh, you know, in general, immigrants that get out of the country are usually have chip on the shoulder in a very different way and the struggle that they have to go through to just get out and be successful, and that hunger, uh, that got them there, there was no privilege, like, they, they were, they came from very, very humble backgrounds and, and literally no money to start with. So I think the, the, that this force is real, right? But you can say that for many immigrants in general as well, but appreciation for math in general or logic, which came through society in a big way, right? Kind of gave... Let's say for example lots of engineering graduates come from only a few countries because the society was bent towards let's say earliness of mathematics or earliness of this, and I think that kind of helps create status that what will get appreciated. For example, being an engineer, being a doctor. Like philosophy major, that was a write-off for the society over here, right? So, uh, the reason I am the rare commodity over here because you, you are not considered to be very bright unless you break into these very hard exams and very, very hard things. So the filtering criteria on its own is big, but there's another interesting framework altogether which I have actually learned from this gentleman called Devdutt Pattanaik. He, he, he applies Indian mythology and management principles together, and it's an interesting thing. So there are three major, uh, Indian gods. One is the, uh, uh, Brahma, uh, the god of creation, Shiva, the god of destruction. I'm, I'm super generalizing but that's the classification, and, and the third is like Vishnu, which is the god of sustenance and, and avatars, the word avatar comes from Vishnu keeps changing avatar, right? So we have had Rama, Krishna, all these guys are avatars o- o- of this. So what you notice is that, uh, if you took a two by, take a two by two of people who are high on values and low on values, uh, high on obedience and low on obedience-

   7. LRLenny Rachitsky14:16

      Mm.

   8. KSKunal Shah14:17

      ...you make an interesting two by two, right? Now, Lord Krishna, uh, which is, uh, one of the very popular avatars, uh, which was non, no, I mean, suits the, suits the entrepreneurial category, which is high on values but very low on obedience.

   9. LRLenny Rachitsky14:31

      (laughs) .

   10. KSKunal Shah14:31

       He was known to be the naughty-

   11. LRLenny Rachitsky14:33

       Yeah.

   12. KSKunal Shah14:33

       ... uh, uh, god and he could actually create lots of things. And there is Rama, which is known to be the one who follows principles and obedient, right? So they, they will follow dharma, uh, and, and scale on that. And, and then there are these notorious characters. There's Ravana, which is low on values, low on, uh, uh, obedience, and there is Duryodhana which we, he says that he's low, uh, high on obedience but low on values, right? So these are the people that you don't want to be, and what you notice is that, uh, uh, a lot of CEOs have done well because they follow the dharma of the founders quite well. They, they have not diluted the dharma of the founders, uh, who have started these companies and managed to sustain that, uh, and a lot of CEOs have this need to say, "Oh, I'm gonna change the company forever and I, it'll be my identity and I will change the logo and I will change the name and I will do all sorts of things." Right? But maintaining dharma, right? Where I will say that these are the principles that were given to me and I'm gonna sustain this and make it even bigger, comes from humility of saying that there is something just built with some pure form factor and I think therefore the, that character stays on, right?

   13. LRLenny Rachitsky15:41

       Mm.

   14. KSKunal Shah15:41

       And, and therefore, the, the characters of Brahma and Shiva are the founderistic, where they'll, they'll create and destroy, like that's the thing, but sustenance is, is the harder one, and, and therefore avatars keep happening, uh, uh, over and over of time and, and different hurdles come and different levels come. But when you, when you think about, uh, the, the archetype of at least the Indian CEOs, I have seen that they are f- fabulous at moving between Krishna and Rama all the time, right? They can play this consistently, uh, and therefore they keep evolving and, and keep making these companies bigger and bigger and I think we, we'll see a lot more of this in years to come because now they have the role models of these individuals who have kind of done well. But the, the key principle is that if you ask the founders, they will love these CEOs if they're around because they maintain the dharma of the thing. And, and for example, let's say what Tim is doing is maintaining the dharma of Steve Jobs, because if he had tried to change the dharma of Steve Jobs and what the values the companies are, it's very hard to imagine it to be sustaining itself forever and ever.

   15. LRLenny Rachitsky16:45

       Wow, what an answer. This, what I love about this is this combination of using a two by two and Indian mythology as like the microcosm of you, which is philosophy and tech, uh, and so I love that and makes a lot of sense that's where your mind goes. Something else this makes me think about is, read this book a long time ago, Jim Collins, Good to Great or one of his early books about leadership and he talks about level five leadership I think is him and where level five leaders are ones where it's not about them, it's about the business and they can disappear in the future and things will work great.

   16. KSKunal Shah17:19

       Yes. And, and I, I feel it is very hard if you believe that your identity needs to have its own position and legacy, uh, and, and therefore a lot of time chasing status causes disruption because you will say that, "Oh, this doesn't have my signature in it," uh, uh, and therefore becoming, uh, uh, a- a- accepting the religion and trying to be the, the pope of it or the father of it is, is better than trying to say, "Oh, I need to have my variant of religion," uh, and that's where the creative destruction starts happening.

   17. LRLenny Rachitsky17:54

       Interesting. Okay, so you said that there's this good balance between Krishna and Rama that happens. Can you just, uh, again summarize the where they are in that two by two?

   18. KSKunal Shah18:02

       So Rama is, uh, high on, uh, values and high on obedience, and Krishna is high on values and low on obedience, but they both are high on values which means they will follow dharma.... uh, up and, and they will change the side. For example, let's say Satya, uh, during the OpenAI crisis played Krishna, uh, and, and got things out. But he, he'll switch back to being Rama and continue to keep scaling it up.

   19. LRLenny Rachitsky18:29

       Amazing. And just to close the loop on here, is your sense that they're like, they're actually thinking about this and they're religious, or is this just like in the ether of growing up in India and this is just part of the culture?

   20. KSKunal Shah18:39

       It's a great question. I don't think they consciously think about it. Uh, but I think if they ever heard this, they would agree with this 'cause that's what they grew up with. And, and the value systems are much more long term. For example, I believe all bad behavior in humans, humans come from being short term, right? Uh, and, and being long term, uh, uh, comes in a very... It's a, it's a big choice to make. A- and, and a lot of times, uh, a lot of people argue that, "Oh, we have arranged marriages and like it's 95% arranged marriages and less than 1% divorce rate," comes from this whole long term thinking, right? That people are married through values versus attraction or lust and all of that stuff, but more long term oriented and about building a family, building values or, or low divorce rate and about we'll fix, uh, along the way versus trying to say, "Oh, I, I need to evolve and I need to move forward." So I think being long term, uh, uh, about that mindset. And, and that's why some cultures last for thousands of years because of this need for everybody to be more long term versus short term.

   21. LRLenny Rachitsky19:52

       The US could use a lot of that these days.

4. 19:55 – 23:04

   Challenges and opportunities in India

   1. LRLenny Rachitsky19:55

      You mentioned this interesting, uh, fact about how in India there... So the fact that most startups fail. You said, you know, I think the classic stat is 90%. And that the risk is a lot higher to start a company and then fail. Can you just talk about what that, what impact that has? How do people try to avoid that? 'Cause that's- that'd be amazing if you can reduce the risk of starting a company. Or is it just it happens and people get super in debt?

   2. KSKunal Shah20:20

      I, I think, uh, long term societies are naturally more risk-averse, right? Uh, and not all great CEOs can become great founders for the same reason. In fact, I would say that it actually makes it very hard to be a founder if you've been a great CEO because y- you've turned into this sustainer, uh, uh, uh, versus destroyer or creator, right? Uh, so the nuance I'm talking about is when you are thinking about like risk appetite, India is changing because now for the first time we are seeing founders being respected and talked about and these unicorns being celebrated and our, our Prime Minister talks about, uh, startups quite openly. We have a national startup day and so on and so forth. So I think there is a thing that has changed this thing. But the core principle, let's understand the core human behavior basics. India still has large arranged marriage. And if you are a founder and a failed founder, your chances of getting a person to marry is still a hard thing to achieve. So if this is all true, then the appetite to take risk will be con- curtailed, right?

   3. LRLenny Rachitsky21:33

      Mm-hmm.

   4. KSKunal Shah21:33

      And somebody gave an interesting example to me that there's a very large, let's say, uh, uh, FM, uh, CPG company in India. And let's say you do a zero to one over there and, and the CEO changes in four or five years and your, your zero to one failed, but you were the best person, that's why you've given the zero to one. The next CEO is like, "So what have you, uh, done in the last five years?" He's like, "Nothing. I just tried to launch and it failed." And, and you're neither given a promotion in the company, neither a new company will say, "Oh my God, I'm gonna hire this talent." So the, the guy who stayed on this stable brand within the CPG company kept growing because that has natural tailwinds. All he has to do is nothing in that brand. And, and then suddenly what you see is that he or she's like managed to do well and this guy has done a zero to one, has not done well. So we, we do not celebrate, uh, risk takers as a country yet. And I think we'll, we'll, we'll change that. I think it's changing already, but we have a long way to go. Uh, one of the beautiful things I, I often talk about is that I, I was in, uh, Portugal, uh, once and I saw... I don't know if you've ever been and seen this, but in, in the church, uh, normally only the royalty is allowed to be buried or, or cremated or whatever, like they, they are there. Only one more category they allowed is the, the explorers. Vasco da Gama, all of these guys who explored the world and took risks and took the country forward. They were given the same position as the royalty, right? So when we give the highest status to risk takers, the country appreciates it. Because ultimately, we're all looking for markers of social validation.

5. 23:04 – 25:50

   DAUs vs. ARPU in Indian markets

   1. KSKunal Shah23:05

   2. LRLenny Rachitsky23:05

      Super interesting. I want to keep talking about India and how it's different and especially what may surprise people about the market, both building there and then how to build products that are successful in India. I saw in a different interview you talk about how there's this big difference between DAOs and ARPUs. That in India it's really easy to get DAOs, basically get lots of users. Really hard to make revenue per user and that changes the way you build product broadly. Could you just talk about why this is the case? Why is, why is it so-

   3. KSKunal Shah23:33

      Yeah.

   4. LRLenny Rachitsky23:33

      ... much easier to get DAOs versus ARPUs and what that means?

   5. KSKunal Shah23:36

      So I think, uh, ARPU is a function of per capita income of a country, right? You cannot make $100 per user from a country for a product when their income is, let's say $2,500 per year as an average for the whole country, right? So what happens is, uh, many global companies love to come to India because we have the cheapest data, very high smartphone penetration. So if you look at lot of global giants, they'll have 500 million users from India or sometimes a billion numbers coming from Asia. Uh, and, and they don't have huge ARPUs, but they, they help you show the user growth, which helps you in your public market and then therefore improve your valuations, right? For example, my, my guess is that... I don't know if this data is public or not or talked about, but my guess is that Meta would not have more than-... three or four dollars per user, per year monetization in India. But if you look at the user growth in India, it'll be huge, right? So a lot of times, um, for global companies, India becomes like great MAU farm uh, but very low on ARPU. Uh, a- and therefore a lot of Indian founders who try to copy the Western markets and say, "Oh, I'm going to have 200 million users," make a terrible mistake, because they will need to then go abroad to find their ARPUs to balance the act.

   6. LRLenny Rachitsky24:52

      You talk about how Netflix is a good example of that, where they launched in India, they got lots of users, but just couldn't make a lot of money.

   7. KSKunal Shah24:58

      Yeah, because, uh, uh, for that users to find relevant content, pay for content when we have tons of free data, tons of free content, like, all over the place, like short videos which are competing with time, like so much going on over here, uh, uh, people actually paying for that by design is gonna be less. And, and I'm not saying that it'll not change in 10, 20 years, but, uh, the expectation that many global companies come over here saying that, "Oh, I'm gonna have like these tens of millions of users who start paying me as soon as I come," uh, for Spotify, for Netflix, for almost anybody with, uh, uh, or, or Amazon Prime for that matter, uh, has not panned out.

   8. LRLenny Rachitsky25:37

      So one of my takeaways here is just when you look at a startup as an investor especially, and you see like we've got 100 million users, don't treat that the same as, say, 100 million users in the US or other markets.

   9. KSKunal Shah25:49

      Absolutely.

6. 25:50 – 27:55

   The perception of time in India

   1. KSKunal Shah25:50

      One more thing is, uh, value of time as a concept, right? So one of the things you'll notice then is that no Indian has ever been paid an hourly salary in their entire life.

   2. LRLenny Rachitsky25:59

      Hmm.

   3. KSKunal Shah25:59

      Right? But let me ask you a question. What was your first ever job and how were you paid?

   4. LRLenny Rachitsky26:04

      My first ever job, I was tutoring, tutoring women on about computers and passing Microsoft certification test, and I was paid, I'm pretty sure it was hourly.

   5. KSKunal Shah26:12

      Now, most likely you'll remember what the hourly income was, and, and even though you've started making a lot more, you still have, have the concept of what the value of your one hour is.

   6. LRLenny Rachitsky26:22

      Mm-hmm. Yeah.

   7. KSKunal Shah26:23

      But if you ask most Indians, uh, and if you ever come to India and do this exercise when you meet them, ask them, "What's your income per day or income per hour?" Nobody will be able to answer, no matter what their job is. They could be staff at the restaurant to somebody who's doing really basic work, to anybody in a any fancy job, because we've never ever been paid an hourly salary. So when you're not paid an hourly salary, the concept of time is not the same. And when the concept of time is not same, paying for time is hard to do, right? Uh, and therefore you'll see a lot of Indians who make, let's say, uh, I don't know, maybe $100 an hour, uh, uh, still spend an hour to save $10 on a flight ticket, because that's what it is. And, and if you, by the way, discuss that with many of the Indians in the West also, you'll realize that this is a common joke, that they will still fight for the $10 because the value of time is something that is harder to get used to unless from your childhood that, the unit of time was moved smaller and smaller.

   8. LRLenny Rachitsky27:29

      That is really interesting. And you're saying that comes from just the fact that people never get paid hourly, it's always a salary, and so people don't break down.

   9. KSKunal Shah27:36

      The concept of valuing time, uh, uh, uh, like many Indian languages do not have a word for efficiency.

   10. LRLenny Rachitsky27:44

       Wow.

   11. KSKunal Shah27:45

       And, and that's true for many Asian languages, the word for efficiency does not exist. So then how do you value it if it's not in your vocabulary?

   12. LRLenny Rachitsky27:54

       Fascinating.

7. 27:55 – 30:33

   The curse of focus in Asian markets

   1. LRLenny Rachitsky27:56

      There's something else along these lines of DAOs and ARPUs and efficiency that you talked about that I love, which is this idea that focus is, is a curse in Asian markets. That in the US there's often this ad- advice, focus, build one thing that's amazing that everyone loves, try to make that work, scale that, and then only then build a new product or build something, uh, build a new big feature. And your advice is in India and Asian markets in general, it's the opposite, and I think it's because you make so little per user. Could you talk about that?

   2. KSKunal Shah28:25

      Yeah. I think one is you make very little per user, so you have to do many things. But also all low-trust markets... And, and let me define low-trust markets is their consumers are a lot more wary of trying new things, uh, because there are no institutions that protect you against a bad behavior done by a company, right? So for example, if I ever had a fall, uh, in a coffee shop in the US, I can think about suing them and making money off it. In India you're only worried about, "I'm gonna pay my thing," and you don't even think about suing the coffee shop or even hoping that you will get any money for that. So what happens is in a low-trust country, uh, uh, and it's all developing nations are low trust by design, uh, because the institutions are not strong enough to kind of really, really take care of many things, what happens is there is concentration of trust. So you will see that super apps, superstars, super companies all exist in low-trust markets because the lack of trust creates concentration of trust, right? Uh, and, and therefore you will see one app can do 400 things. For example, we have a company like Tata that can do salt to car to jewelry to anything and people will buy because it's a Tata brand, 'cause it comes from a low-trust society trusting the brand and, and not being, "Oh, I'm, I'm going to, of course, prefer this new brand." And, and try... The, the, the joy for trying new, new things is not so high in low-trust nations.

   3. LRLenny Rachitsky29:47

      Wow, I'm learning a lot here. I didn't know all this. So essentially brand is even more, exponentially more important in Indian markets.

   4. KSKunal Shah29:55

      It's funny, but the oldest brand in the world is a brand called as Chyawanprash. Uh, it's, it's, uh, by a ga- name, guy named Chyawan who built a prash, which is a, a, a sort of a paste that you can have for good health. And, and, uh, it's the... It was built in India, uh, uh, many, many, many, many centuries ago. Uh, uh, and, and, and... By the way, lots of Indian businesses still have the name of the person behind it. Even the US used to like that, like JP Morgan, all these guys are not some fancy name, they're name of people. Uh, and therefore in India, uh, trust still comes from a lot of names of people who had a lot of trust behind them and reputation behind

8. 30:33 – 33:23

   Challenges and opportunities in India (continued)

   1. KSKunal Shah30:33

      them.

   2. LRLenny Rachitsky30:33

      I want to zoom out a little bit before we go in a different direction. What do you see as either the most pressing challenges in India right now for tech, or the biggest ... and/or the biggest opportunity for Indian startups? And then just generally, where do you think things will evolve in the next few years?

   3. KSKunal Shah30:51

      Sometimes I wonder if the challenges and the opportunities are exactly the same.

   4. LRLenny Rachitsky30:55

      Mm-hmm.

   5. KSKunal Shah30:55

      Uh, for example, one of the biggest challenges we have is, uh, we have very low female participation of labor compared to many markets. But I also believe it's an opportunity because you can, let's say, use AI and create many new types of businesses and opportunities because now, like work from home is not a co- alien concept anymore. You can actually create very interesting businesses for that. Number two is, uh, uh, uh, w- we are low on per capita income. So what AI can do, instead of taking our jobs away, it just make us brighter because now, uh, like Satya talks about, that now expertise is available in air. So you can actually just kind of ride on that and really make the world very equal in many, many ways, right? So that's m- massive opportunity and also the challenge because I often make this joke that the largest employer of the world is inefficiency and if you take that away too quickly, we'll have a very, very jobless world, right? So the thing is that, uh, it can be an opportunity for a country like India and also potentially a threat because if you don't start becoming great at AI... I- I was actually just telling somebody today that maybe all of our interviews should become about giving a task that they can only perform if they were very good at AI. And no matter what the job is, you make that the minimum criteria that, uh, if they cannot use that, leverage that, they'll become a liability in five years anyways. And last one is, uh, we have a very young demographic, very well positioned with access to technology, access to smartphones and so on and so forth, a lot of hunger. Uh, but our challenge is also that it's also the first generation that is truly lu- learning what is entrepreneurship, what is risk, and, and we'll make all sorts of mistakes, get there, and I hope we don't go into shell after having these large scale failures which we have not seen before. India is not used to layoffs. Like startup world is used to layoffs, but in India if you started through layoffs, it becomes the national news and all sorts of discussions happen over here. So we are not there yet. So we are stuck between like being a somewhat of a collectivist or some of our individualistic societies. We are somewhere... We, India is a great remix of everything.

   6. LRLenny Rachitsky33:14

      Mm-hmm. I love this line you just shared of inefficiency is the largest employer in the world. I totally get that.

9. 33:23 – 36:40

   Lessons learned from building CRED

   1. LRLenny Rachitsky33:23

      Okay, so let me talk, let's talk about CRED for a bit. So you had, I think, three startups before CRED?

   2. KSKunal Shah33:30

      Yes.

   3. LRLenny Rachitsky33:31

      Okay. And then you've been building CRED for about six years now.

   4. KSKunal Shah33:34

      Yeah.

   5. LRLenny Rachitsky33:34

      I'm curious just along this journey of CRED, what you've learned or, or changed your mind about during this phase of your career versus previous phases.

   6. KSKunal Shah33:45

      I think CRED's insight was actually quite simple. We realized that, uh, un- unfortunately the value of time and per capita income is concentrated in 25 million families and therefore focusing on them is important and they are lot more global in their approach versus rest of India. So, so you have to build them very differently. Uh, and, and I realized that ability to focus on a customer set which is not historically possible to do because everybody, every investor expected us to be the next China. Uh, and the only similarity of India and China was the population and nothing else was similar. So I think, uh, having that conviction that I'm going to build only for this folks and this large enough market, uh, it... Thankfully I had one success for somebody to bet. So our, like our series A was 25 million dollars. I would have not had that luxury if I had no success in the past because I had no product with any monetization to prove that I'm doing the right thing. It turned out okay, but I think I could get a lot of people to take risk behind my insight or my thesis is because I focused on the right customer category and, and built on it. But I think the few things I've learned differently is that, uh, uh, companies that are very, very good at zero to one will not naturally become great at 10 to 100. Uh, there are lots of different lessons to learn. The founder has to evolve. The biggest thing that has to happen. Most people at CRED are people who have not seen a bigger business than CRED, which comes at its benefits and costs, so you have to gentrify the org every now and then to, to make people understand the value of many of these reliable things. And, and I often tell people that entrepreneurs are uncertainty absorbers, uh, for everybody. For, for employees, for investors, for customers. They, they are... A- and therefore, they, they, they get rewarded for being those people who remove uncertainty from people's life. Uh, but the kind of expectations keeps changing at the company of scale. For example, if you have a, a, a let's say a seed stage investor, they, they are very used to very high uncertainty and they, they're happy with some absorption. But as you get to growth investor and let's say you get sovereigns on your cap table, the, the amount of stability you need to provide is significantly more and, and therefore you need to evolve very, very differently. So I think those are the few lessons I've learned. Talent, you start realizing that not everybody can scale into everything a- and, and y- you cannot expect that you can give up zero to one DNA just because you're building 10 to 100. So how do you kind of co-exist with those things? How do you react to big changes in the market and not become this slow company? Uh, uh, and every company goes through that. I mean, if you look, look at what Zuck went through in the last three or four years was that. He had to... I, I often said that he had to play the Shiva, come and do a lot of destruction to become big again, right? So I think that's what founders can do. Uh, and, and, and it's not easy to do.One of

10. 36:40 – 37:55

    Profit pools can provide valuable insights into the values of a country

    1. KSKunal Shah36:40

       the things I've learned is that profit pools of a country tell you a lot about what the country values. And trying to, uh, copy somebody else's profit pool to your country will not be a wise idea because the country's values are demonstrated in what profit pools exist. Let's take an example. In the 1,000 most profitable companies in India, the number of retailers would be probably two or three. But if you look at the Western market, you will see a bunch of them because, uh, it's a consumption market, plus very high divorce rate, which means you are always peacocking again in the market again. You're trying to be fit and be, uh, cool and all of that. India has very low divorce rate, less than 1%, uh, uh, arranged marriages. Uh, and fashion spend, and because we have a, a lower female participation of labor, India's probably the only market where female fashion spends is less than men's fashion spends. Everywhere else, it's probably five, six times more for them. So what happens is you start appreciating what the country values. For example, I have noticed that many patriarchal societies have very significant market cap in financial services versus consumption. And these broad patterns you start thinking about very, very differently.

11. 37:55 – 39:55

    Founders’ role in company growth

    1. KSKunal Shah37:55

    2. LRLenny Rachitsky37:55

       So many lessons there. I love this idea of a founder being a- an uncertainty absorber. This other point you made about (laughs) Zuck becoming the Shiva in Destruction touches on something Brian Chesky and I chatted a bit about is how founders often start in control, giving very micromanagy, just driving the ship. And then as the company grows, they delegate, and empower, and then things start to slow down, and then they come back, (laughs) play the Shiva, and, and, uh, take control again. Is there anything there that you've seen

    3. KSKunal Shah38:25

       Yeah, but that's the universe. The, it's the, the universe goes through the exact same phases. So if you, if you study Indian mythology, you'll see that there's a Brahma, Vishnu, Mahesh cycles, and every Yuga, as it's called, goes through these three phases all the time.

    4. LRLenny Rachitsky38:38

       Beautiful. I see. So this is just inevitable. This is the circle of life.

    5. KSKunal Shah38:42

       Absolutely.

    6. LRLenny Rachitsky38:43

       Amazing. I love this all just ties back to your philosophy background. I love it. It's beautiful. This episode is brought to you by Dovetail, the customer insights hub for product teams. Are you working in a feature factory building filler that nobody wants? Probably, because the sad truth is that most SaaS features are rarely or never used, costing the industry billions every year. Let's change that. Product managers, Dovetail is holding their first industry conference. It's called Insight Out, and they want you to come. Over one day in San Francisco, the product community is coming together to learn how to better leverage customer insights and build products that people actually love to use. It's on April 11th, and you can hear from product leaders from Uber, Twitch, Meta, and Netflix as they share their strategies for driving innovation, thriving in uncertainty, and balancing customer-centered work with business needs. And here's the kicker. It's absolutely free for online tickets. Just go to dovetail.com/lenny to register. This is thanks to Dovetail, the best way for product teams to get the most out of customer insights. Check it out at dovetail.com/lenny.

12. 39:55 – 43:24

    Profitability and Indian business culture

    1. LRLenny Rachitsky39:55

       Okay, so on CRED, so what, here's a funny thing that happened. I asked people on Twitter what questions to ask you on this podcast, and one of the most common questions was, "When do you think you'll become profitable?" Which is interesting because when I have other CEOs that are founding a company that is in... Most companies aren't yet profitable, nobody's asking that question. So I'm just curious why, why is that such a common question that comes up?

    2. KSKunal Shah40:17

       It's, it's fascinating. It's fascinating. Uh, as a country, most businesses are of trading. You buy something at low cost, sell it at a higher price and you make profit, right? Most of our businesses, most of our family businesses were trading, right? But building a CapEx-heavy distribution, monetizing it later on, focusing on high revenue growth rate versus trying to get profitability first is not known to us, right? So when they see these large numbers of losses, like there's a shock that, "Why would somebody give you this kind of money?" Like, and then, by the way, my, my own dad wouldn't respect me till I was a profitable company. So it's not surprising that, uh, people in India have these comments, but it also comes from not understanding how businesses are built in internet world, where VCs are giving you the capital to kind of build distribution, unique product, edge brand, all of that stuff, and then monetize later on and, and monetize big, and then have very large profit pools to go after. But a lot of times, uh, uh, this comes from not understanding this business. Uh, and, and I feel it'll change because many internet companies are now getting very profitable public listed. So we'll have a decade. Uh, uh, let's understand one thing. Like in the US, uh, maybe 27, 30% of US market cap is now tech companies. India, tech companies would probably make less than two, 3% of the market cap. So, uh, we are mostly... And, and, and I'm not saying India has this fabulous history of building very, very profitable tech companies. We are probably the first generation that'll have to prove ourselves to be very large, profitable companies. But we are still figuring out what this means, and, and the fact that this question... By the way, I can tell you one thing that I have been asked this question by people on Twitter way more than my, any of my investors ever asked me this question, which also creates an arbitrage for entrepreneurs who can actually build businesses and are going to raise capital, uh, and, and prove their business model with very revenue, high gre- high revenue growth rate and, and build large brands and so on and so forth. But it... I find it fascinating as well. Uh, also what one thing you'll see fascinating in India is that there is, like, immense amount of trolling and doubt that will come in your comments, no matter what you do. Uh, uh, so if you see any founder in India, they'll post something about their thing. The comments will rarely have...... appreciation. So, uh, uh, it, it's... It feels sad because, uh, w- when you see global companies do stuff, like, India will lose their shit on Apple Vision Pro and all this stuff and, like, the Twitter will go gaga over it. But I think when it comes to... And I believe, uh, envy is hyperlocal. We do not envy Elon Musk for all the stuff he does because he's so far away. But we, we envy our own, uh, uh, because they were just like us not many years ago. Uh, and, and therefore, uh, envy is like Wi-Fi. It's like a-

    3. LRLenny Rachitsky43:23

       Mm-hmm.

    4. KSKunal Shah43:23

       ... it's

13. 43:24 – 44:41

    Advice for staying positive amid criticism

    1. KSKunal Shah43:24

       like a hyperlocal service.

    2. LRLenny Rachitsky43:25

       How do you stay positive and focused and not let that stuff bring you down? And do you have advice for founders in India that are dealing with the same sort of feedback?

    3. KSKunal Shah43:35

       It's funny, the number of calls I've got from founders who start getting hate and the go-to person to get this call because, uh, uh, they, they've seen me get it for many more years. And I tell people that we couldn't have made it this far if we cared about criticism of everybody, uh, versus people who've done better than us. If somebody who's done anything better than me gives me any amount of criticism, I will absolutely flip and make all the changes and evolve. And I, I seek feedback all the time from people. But if I start taking feedback from everybody who, who do not understand the nuance and empathize with what I'm doing... I'm not saying that we should not take customer feedback. That's very different. But let's say somebody commenting about your business who does not understand the nuance of it, uh, you can't be reacting to everything. And I, I often tell people that, "You know, there's a reason, uh, elements with lower valencies are called noble gases, because they're hardest to get reaction from."

    4. LRLenny Rachitsky44:37

       (laughs) Nice. Over my head but I-

    5. KSKunal Shah44:40

       (laughs)

    6. LRLenny Rachitsky44:40

       ... I, I love it anyway.

14. 44:41 – 47:35

    The promising market in India

    1. LRLenny Rachitsky44:42

       It's so interesting. Like, I love all these different... these elements you're pointing out of how different building in India is that I think people in the US have no idea about. And so I appreciate you getting into all these little elements. Is there anything else around the Indian market that may surprise people before we go in a different direction about building a startup there?

    2. KSKunal Shah44:59

       For all the challenges, uh, India remains the most promising market that one can be building for right now 'cause everything is going our way. We have all sorts of digital public infrastructure, government support, uh, uh, all these great people doing extraordinary things, uh, apart from the Twitter noise. And Twitter is designed for, uh, uh, ou- outrage getting likes so I, I wouldn't read too much into it. But I think all of us are doing well because we have an audience set, uh, an evolved ecosystem that is fully supporting us and, and really taking it forward. So I think I, I wouldn't want to be anywhere else in building because of this extremely vibrant, uh, crazy opportunity that one can learn from. However, I wish... I often wish that... I wish I could get a one-month internship with Brian and learn how to do things. And I've never had the luxury. I can only watch his podcast with you to learn a few things. But what if I got a chance to be there? And, and I, I missed that part where I've never been really trained by these extraordinary product brands, uh, or, or even observe them make decisions. So I, I recently posted one thing that, you know, the, the word operation theater comes because operating used to be a public process and people used to pay money to watch surgeries and see all the bloody gory stuff, uh, uh, even before anesthesia was born. And, and, and, and there's just so much joy in seeing somebody do their action. And I wish there was theater for Brian take a product decision, Zuck take a hard call on killing a product, or, or, or seeing Tim, uh, uh, rejecting, uh, uh, all the ideas that they have to... before the GTM of a product. I think we could benefit so much from that. And, and unfortunately it remains in very small circles. And like I said, I... The reason I said you do a fabulous job of removing some of the information asymmetry and kind of making it more democratic, but there is so much more that we all could learn. Uh, uh, and I, I feel extremely, uh, envious to many people who have the opportunity to kind of work with the best of the best, because many f- of us from India never had the luxury. We had to figure out everything on our own.

    3. LRLenny Rachitsky47:10

       Wow. How cool would that be just to have a camera in some of those meetings just as a learning experience? Because, like, very few people are in those rooms. And there's so much to learn. I think though people will find, "Holy shit, this... One, this is how decisions are made. What is going on?" And two is like, "Uh, I don't want to work for this person. This sounds, uh, very difficult (laughs) and stressful." Those are probably some takeaways

15. 47:35 – 52:59

    The power of curiosity

    1. LRLenny Rachitsky47:35

       that will emerge.

    2. KSKunal Shah47:35

       Yeah.

    3. LRLenny Rachitsky47:36

       Kind of along these lines, something that comes up a lot in your talks and work is, is curiosity.

    4. KSKunal Shah47:43

       Yeah.

    5. LRLenny Rachitsky47:44

       You have a show called Cred Curiosity. You often talk about the power of curiosity. I'm just curious why is curiosity so important to you and why is it important for other people to always stay curious and what value is there?

    6. KSKunal Shah47:57

       I think a curious person is somebody who's constantly demonstrated- demonstrating that they are not proud of their expertise. And they will demonstrate extraordinary amount of excitement when they face a problem which they have no clue how to solve. Uh, and, and therefore, a lot of people stop growing because they want to constantly demonstrate their expertise versus demonstrate their curiosity, right? Because curiosity should come from security because you... I- Imagine I was in a... I'm the founder, CEO of this company and this group of 60 people on WhatsApp, somebody posts something and I'm... and ask a dumb question, "What does this word mean?" You, you need to have the security to feel okay with it. But a lot of people out of insecurities try to demonstrate expertise and, and do it on Google, not ask these people. And I think that slows down the compounding growth. And I think, uh...... it, it, it keeps you very good at adapting. Right? Uh, so it's funny, I was recently ... GPT is my favorite thing to keep asking random questions, because now I don't need to really worry about Google having those questions answered or not, because I can ask through the GPT. So I recently asked the question that, which animals have managed to survive ... which species or animals have survived for more than 100 million years without changing too much, and what is common in all of them? So GPT came up with an interesting answer which says that sharks, uh, um, uh, uh, like horseshoe crab, uh, uh, uh, like, uh, uh, crocodiles, and all of these people have survived to do this thing. So three distinct traits were, one, ability to, to reduce metabolism at will.

    7. LRLenny Rachitsky49:41

       Mm.

    8. KSKunal Shah49:43

       Okay? It's fascinating. I can s- bring down my metabolism by 20 per- like one, one-ish to 20 or like ... a crazy, crazy scale they can bring the metabolism down. The second one is ... And by the way, a lot of, uh, in, in ancient, uh, yogis have demonstrated this as well. Uh, it comes from the same yogic practice. The second thing is about ... And, and if you think of companies, the context is the same. If COVID came, did you ... could you, could you slow down your metabolism and survive? Right? Or you burnt your way out of the ... and disappeared. The second thing that was interesting was very high conversion rate on every attempt to secure food. Right? Uh, uh, they don't go around chasing randomly and doing things. They have a very high conversion rate, which means high judgment and the deadliest bite. So they'll not chase many options, but if they chase something, they will have the biggest bite on it and they'll convert it. And the third thing that was more interesting one was, they have survived all sorts of crazy environmental changes. Just adapting. And adaptation comes from curiosity. Right? Uh, uh, uh, and, and you could see those people. In COVID, there were two sets of people who were completely gone into shell, and there were the like, who were like this curious, like, "Okay, so what do I do with this? Like, what happens now? Like, do I need to change something? Do I need to tweak something?" So the ability to change (snaps fingers) very quickly. So I, I often feel that curiosity is that demonstration to adapt and learn. And, and, uh, you only create more information asymmetry. To me, wealth is nothing but information asymmetry. All the best companies in the world have unfair information asymmetry and, and that comes from curiosity because you're constantly collecting dots, connecting dots, collecting dots, connecting dots, and end up creating this unique edge for yourself and information asymmetry for yourself. And if you assume that I have collected enough ... I mean, there's ... no human life is gonna be enough to connect, and connect all the dots. Right? We'll never be able to get ... And sometimes I envy the stuff that you do because you're, like, you are efficiently connecting and collecting dots, uh, by having luxury of all these people to talk to, and, and you are making more dots getting connected. So your information asymmetry is growing.

    9. LRLenny Rachitsky52:14

       Wait till you, uh, IPO and then someday maybe leave CRED and then you can start this podca- this podcast of your own like this and connect all the dots. And I think that's a reference to Danny Meyer, who's, uh, the founder of all these fancy restaurants and big on hospitality and has this phrase, "Always be collecting dots," I think. A, B, C, D.

    10. KSKunal Shah52:32

        Nice.

    11. LRLenny Rachitsky52:32

        I'll link to that. Yeah. Um ... Okay, wait, this is really interesting (laughs) , this list of what are the common traits of the most, uh, long-lasting animals. They can lower their metabolism at will, they have a high conversion rate to get food, and they've survived many types of environments. And I think there's a lot you can transform as you've done to startups and leaders. This could be its own ... If you haven't written about this, this would be a cool blog post. (laughs)

    12. KSKunal Shah52:58

        (laughs)

16. 52:59 – 55:31

    Who Kunal looks up to

    1. KSKunal Shah52:59

    2. LRLenny Rachitsky52:59

       I'm curious who you look up to in business, either in India and outside India. Who comes to mind where you're like, "I really inspired, am inspired by these folks"?

    3. KSKunal Shah53:10

       I, I often tell people that I hate the word favorite because it tells me to become limited in my mind. So I, I stay away from being favorite, but I, I learn all the time from everybody and there are so many people to learn across the world and in history, in recent past, and, and, and every time you will discover fascinating, extraordinary things about them. So I, I don't think I have a person. I, I am this person about, "How did they solve this hard problem?" So, Lenny, one of the things that we started doing recently and not very ritualistic about it so far is I ask, uh, myself and my key reportees every month, we go around the table and ask ourselves, "What are the hardest problem we solved last month?" And it's very hard to come up with an answer. And if you do this with the product leaders, like just go around and ask, "What are the hard problem you solved last month?" You will realize that we all stay very busy and displacement is hard, but if you notice extraordinarily successful people, they'll have a lot more content to talk about every month, every quarter. Because they're obsessed about making that big displacement. Uh, and does not come by being busy. And that's another thing, where you cannot chase the big thing. You don't see a crocodile being busy. You see a crocodile just waiting patiently at the watering hole for that best meal and have the deadliest bite for that. So the beautiful definition of predator I ... predators I read was, "The one who burns the least amount of calories to earn the most amount of calories."So how do you become that? And I think when I meet people who are extraordinary at that, and it comes in all shapes and forms, I learn something from them.

    4. LRLenny Rachitsky55:07

       So in these meetings you have, are you judging people's-

    5. KSKunal Shah55:10

       (laughs)

    6. LRLenny Rachitsky55:10

       ... success based on how many hard problems they solve? Now that they've heard this, they're gonna be like-

    7. KSKunal Shah55:15

       Yeah.

    8. LRLenny Rachitsky55:15

       ... "I need more."

    9. KSKunal Shah55:16

       Because, because if you're senior, wh- what is, what is the role of a senior person? You have to be the chief problem solver.

    10. LRLenny Rachitsky55:24

        I love that. I often, I often think of leaders as, uh, professional firefighters or just endless fire to put out.

17. 55:31 – 58:42

    Kunal’s favorite sources of content

    1. LRLenny Rachitsky55:31

       Kind of along the lines of people and where you learn from, is there any sources of content? This is actually an audience question on Twitter. Uh, Anurag Verma asked this. What are your favorite sources of content to learn from in terms of what's happening in the world and what to pay attention to?

    2. KSKunal Shah55:47

       I wish I could think of an answer. My method of collecting information is mostly about I come up with conjectures in my head, and then I go all over the place to find out if there are proofs of what I'm saying is true or not. For example, I recently came up with the conjecture that everybody who's been successful in the history of business or vices have historically done a lot of philanthropy to create a good image for themselves and therefore being treated as a respected citizen versus being treated as a person who did vices to make wealth. And then I asked this to GPT and I, GPT came up with like 50 people who did what, uh, and what were their vices, how did they change their reputation by doing lots of, uh, philanthropy and all of that stuff. And, and then a thing happens and then I research in all sorts of directions and, and I have no boundaries to if I go to chemistry or physics or, uh, uh, human behavior to some universal principles. So my method of learning is constantly come up with conjectures from the dots that you've connected and then, like, absolutely work hard to find proof of it and then use that to connect to the next dot, right? So I often tell people that everything that you, every book you read makes your brain porous to read the next book.

    3. LRLenny Rachitsky57:09

       Mm.

    4. KSKunal Shah57:10

       That's the purpose of books. But that's true for every single thing we learn. It makes our brain more porous for the next thing that we are supposed to learn.

    5. LRLenny Rachitsky57:17

       Is there a recent example of that where you got super sucked into some topic?

    6. KSKunal Shah57:20

       Uh, well, it's my daily life. I get sucked into topics every now and then. Uh, uh, for example, I've been, like, uh, thinking about second order effects of AI and what happens to countries and, and jobs and, and how to expect some of these things to change, not change, rate of change, rate of skill change. Uh, I got recently obsessed with what happens to lab-grown diamonds if they become big. Does it kill diamond? Does it make diamonds bigger? And then I looked at parallels of pearl industry was very big before, uh, cultured, uh, uh, pearls came in. The, the high status of pearls disappeared because everybody could have pearls. Uh, uh, but not too long ago, pearls was treated to be a very royal thing to be, e- every prince and princesses, uh, used to have pearls around them. But as soon as it was easy to, uh, uh, uh, manufacture in a lab, it lost its value. So I think, so then should I be shorting, uh, or, or going long on diamonds thinking about what happens? So, but there'll be a temporary period of making a lot of money on lab-grown diamonds, uh, which will kill its, it'll become parasitic on the status of diamonds and, uh, and destroy all its profit pools.

    7. LRLenny Rachitsky58:31

       You heard it here first, time to buy some diamonds futures.

    8. KSKunal Shah58:34

       (laughs)

    9. LRLenny Rachitsky58:35

       Uh, I feel like, I feel like there's no one in the world ChatGPT impacted more than you.

    10. KSKunal Shah58:39

        (laughs)

    11. LRLenny Rachitsky58:39

        Considering how much you want to spend just digging into random topics.

18. 58:42 – 1:02:54

    Asking great questions

    1. LRLenny Rachitsky58:43

    2. KSKunal Shah58:43

       I, I often wonder, uh, Lenny, like if you took the most curious people and made their GPT searches public-

    3. LRLenny Rachitsky58:49

       Mm.

    4. KSKunal Shah58:50

       ... a lot of people will learn because the problem of GPT is now it will give, it'll, it'll make the people with great questions do well versus people who are, uh, looking for, uh, basic answers. So I think the world is gonna be unfair to people who ask great questions.

    5. LRLenny Rachitsky59:05

       Interesting. Okay. Well, I gotta ask you, is there any advice you have for asking great questions that has helped you in your work and career and life?

    6. KSKunal Shah59:14

       Whenever somebody has many choices and they make the right choice in whatever domain they have, for example, let's say you could hire anybody, but you hired great people. Or let's say you could marry anybody, but you married a great person and so on and so forth. When you've got many choices to make, how do they make choices for that domain of expertise? And I think that is the most... And many times they cannot be, they're not going to explain how they make their choices. They will really go in into that because they don't really have their mental model figured out. Uh, they cannot articulate, they cannot coach, they cannot explain. But if you can figure out a way how they make great decisions in general in, in whatever domain of, uh, work that they are doing, you will find many interesting insights coming over there. The, the other good questions to ask is about, um, second order thinking. What do they think will happen, uh, to the world and why did they come to that conclusion? And you see their full chain of thoughts is very powerful. For example, second order thinking is known to be the most powerful trait to predict success of somebody but-

    7. LRLenny Rachitsky1:00:22

       Mm.

    8. KSKunal Shah1:00:23

       ... I often wonder what happened in childhood of people who became great at second order thinking. And that question is not fully discovered or discussed yet. Uh, uh, and I've found some loose examples of did you play strategy games or only physical games has a strong correlation to building. So rigor came from physical games, but, uh, second order thinking came from playing strategy games as a kid. And if you had both, you could do really well in general because you have a discipline and second order thinking together. Uh, then, uh, did you ever have an exercise, uh-... on looking at history. For example, one of the things I recommend to, uh, parents to do with their kids, I call it the Wi-Fi school, is, uh, ask them a one why question every ti- every meal and let them come back with the answers next day. For example, why do humans wear jewelry, and why is, uh, uh, uh, something in a certain way? And let them go into the full depth of history and find out, uh, or why, uh, why is it so expensive to advertise on Super Bowls? And, and so on and so forth. You just, uh, take one question and if you train them on why, they evolve at a very different rate. Because how what are the questions which do not evolve at you at a much higher rate because why is the deep question-

    9. LRLenny Rachitsky1:01:45

       Mm-hmm.

    10. KSKunal Shah1:01:45

        ... and, and it breaks a lot of things in your head. Or another question about origin stories, like how did, how did elevators come into being? And, and what made earphones happen? And what made microphones happen? And why is it called microphone? And why is it called a phone? And if you just mo- moment go into those depths, you'll see people kind of build second order thinking automatically because either you go in history and see second order thinking coming involved with that, or you play games that train your brain for second order thinking. There's a spectrum, uh, but that's broad range of things that I think people should be asking.

    11. LRLenny Rachitsky1:02:17

        I'm looking forward to a Kunal, uh, children's raising book, like a book to help you raise kids.

    12. KSKunal Shah1:02:23

        (laughs)

    13. LRLenny Rachitsky1:02:23

        This could be your future.

    14. KSKunal Shah1:02:24

        Uh, I don't have kids so I can run experiments on everybody else's kids-

    15. LRLenny Rachitsky1:02:27

        (laughs)

    16. KSKunal Shah1:02:27

        ... so it's, uh, it's a great thing to do.

    17. LRLenny Rachitsky1:02:29

        I feel like with these questions, uh, I think the rule has to be you can't just ask ChatGPT for the answer. You have to block it.

    18. KSKunal Shah1:02:34

        Actually, it's not bad. Uh, uh, I think you should encourage it because we have to assume that we are gonna be all co-pilots of AI now.

    19. LRLenny Rachitsky1:02:41

        Mm-hmm. Mm-hmm.

    20. KSKunal Shah1:02:42

        Uh, what you have to do is derive the second order insight that, okay, if this is true, where are the similarity of this in somewhere else? Like give me an example of this found somewhere else-

    21. LRLenny Rachitsky1:02:52

        Mm-hmm.

    22. KSKunal Shah1:02:52

        ... and so on and so forth.

19. 1:02:54 – 1:05:26

    Contrarian corner: Wealth is nothing but storage of energy

    1. KSKunal Shah1:02:54

    2. LRLenny Rachitsky1:02:54

       Amazing. Okay. I have just a couple more questions be- before we get to our very exciting lightning round. First, let's visit contrarian corner. I'm curious what's something that you believe that very few other people would agree with you on, and why do you hold that belief?

    3. KSKunal Shah1:03:12

       Our understanding of wealth is flawed, uh, and what wealth is. Uh, to me, wealth is nothing but storage of energy, uh, and therefore the reason wealth is not zero sum because energy is and we are just finding all ways to convert energy in our advantage. We are the only species that have managed to convert all forms of energy to advantage, kinetic energy and fuel and sound and solar. Like no- no other species has done this. And therefore since Industrial Revolution, our wealth has gone like this and continue to be like that. AI and nuclear fission and all this stuff will kind of take us right there. So, uh, I, I, I have a strong view that we will never, never have, uh, equality of wealth. Uh, in fact, chasing that is actually a bad idea. But if you let people, uh, do well and chase wealth, they'll have enough wealth for everybody else, uh, and we could take a lot of people out. And then I think it's com- complicated because we can have all these democratic arguments that, oh, the wealth is concentrated and all that stuff, but that's the physics of wealth. It'll always be concentrated. Uh, it changes mediums, companies, countries. They're all, uh, uh, to me, wealth is nothing but an entropic complexity, uh, that'll keep changing its form and shape. Uh, uh, uh, you can keep fighting it or accept physics and, and take the benefit of that physics.

    4. LRLenny Rachitsky1:04:34

       I think of, uh, Elon had this interesting point that wealth is just a database where everyone's... that wealth, I guess, is just a row in the database and here's how much everyone has, and you're just transferring numbers around and that's, that's the whole economy of the world.

    5. KSKunal Shah1:04:48

       No. The, the nuance that is important is that of you can actually increase the database size infinitely-

    6. LRLenny Rachitsky1:04:54

       That's true.

    7. KSKunal Shah1:04:54

       ... uh, and, and, and, and therefore his vision of, uh, sun's energy, like if we really convert all the energy to our advantage, the amount of wealth we'll create for humans is disproportionate. Uh, and, and all the species that have managed to collaborate and cooperate to create wealth, for example, let's define wealth as biomass. So let's say ants and bacteria and humans are the only few things that have the largest biomass on this planet because we figured out how to make energy work to our advantage.

    8. LRLenny Rachitsky1:05:23

       Wow. Uh, I love all the directions we've

20. 1:05:26 – 1:08:57

    Failure corner

    1. LRLenny Rachitsky1:05:26

       gone.

    2. KSKunal Shah1:05:26

       (laughs)

    3. LRLenny Rachitsky1:05:27

       Probably the last question, is there a story of failure in your career that would be interesting to share? Something that taught you an important lesson?

    4. KSKunal Shah1:05:36

       It's a series of failures. Uh, uh, uh, I think there is no escape for anybody who's done anything in life and not failed a lot, like every day, every, uh, thing. But I, I would say that, uh, many initiatives, many products, companies that I've built, uh, have absolutely failed, uh, hiring that have failed, uh, trust broken, betrayals. Uh, so I think there is no end to it, but I think entrepreneurs have this weird ability to forget about failures and almost turn that into a lesson that you hold and you forget the story. Uh, and, and like for example, COVID is literally no memory for me. I, I just don't remember what was COVID, right? It's, it's just a blank, uh, in my head right now. And I think we, humans are great at forgetting the, the memory of failure but remember the lesson from failure. But I think I'm constantly learning, uh, and, and, uh, I often believe that life is too short to make all our mistakes ourselves so we should be learning from other people's failures as well. Uh, and a lot of times we don't do that because we believe that we are special, nothing will like that will happen to us. Uh, but, but as, as humans, we should be learning. I, I would say that m- my life started from a failure. My, my family went through severe financial crisis. I had to start working from the age of 15 and, uh...... I feel, till date, I'm just trying to escape that failure that happened in the family. So I think many of us are just, uh, uh, fighting that initial large failure that we've had and don't want to be anywhere near that. When... Although we are significantly far away from that, but the feeling is exactly that.

    5. LRLenny Rachitsky1:07:27

       It circles back to one of our first few questions about the chips on shoulders, uh, driving a lot of motivation. There's this phrase, "Chips on shoulders, uh, drive chips in pockets."

    6. KSKunal Shah1:07:38

       (laughs) That's interesting.

    7. LRLenny Rachitsky1:07:40

       Yeah. Uh, is there anything more you wanna share about that early, uh, challenge you ran into or is that something you've shared often enough?

    8. KSKunal Shah1:07:46

       No. I mean, I've shared that enough, but, uh, I, I just fe- I, I should not talk about it before because I was thinking that I would get some sympathy for that and, and I... Only till, like, recent past I speak about it because I, I want people to realize that I was not some gifted kid who had some rich parents who made me extraordinarily bright and put me in great school and colleges and I made my way through that. Uh, uh, I, I, I should not talk about it earlier because I, I... There's a lot of tendency to give sympathy to those people that, "Oh, this guy had struggled," and I, I, I don't want to be given any credit, uh, uh, for playing that poverty card or this card or, uh, uh, struggling for food card. Like, that's not an excuse. Uh, uh, there are so many people in the world who've done extraordinarily well because they had the gift of struggle. And I often tell people that this is the biggest curse of successful parents, that that's the only gift they'll not be able to give to their kids, the gift of struggle that they had.

    9. LRLenny Rachitsky1:08:46

       Wow. I think about that a lot. We have a kid, he's eight months now, and so I'm trying to figure out the balance of struggle (laughs) versus making life easy and great. Uh, a new challenge for me to figure out.

21. 1:08:57 – 1:09:38

    Closing thoughts: Share your learnings

    1. LRLenny Rachitsky1:08:57

       Before we get to our very exciting lightning round, is there anything else, Kunal, that you wanted to share or leave listeners with? Anything... any last nuggets of thoughts?

    2. KSKunal Shah1:09:04

       Well, I, I, I would love for the listeners and from different fields of product is that, uh, please, uh, share what you're learning without being... fearing judgment of your peers, 'cause there are many, many people who are learning only because you share your evolution and your thoughts. And I, I believe that a lot more could be contributing and, and a lot of your listeners are really bright people. If they all shared, uh, uh, many people from many places in the world would learn, uh, uh, and, and achieve some amount of success

22. 1:09:38 – 1:18:57

    Lightning round

    1. KSKunal Shah1:09:38

       thanks to your sharing.

    2. LRLenny Rachitsky1:09:39

       Amazing. With that, we've reached our very exciting lightning round. Are you ready?

    3. KSKunal Shah1:09:45

       All set.

    4. LRLenny Rachitsky1:09:46

       (laughs) Let's do it. First question, what are two or three books that you've recommended most to other people?

    5. KSKunal Shah1:09:53

       It keeps changing a lot, but, uh, my books are usually around understanding human behavior, uh, and, and I keep changing based on the person, but, uh, I think it's the biggest subject. All our customers, all our investors, all our employees, all our relationships are all humans, and the subject that we are weakest on is human behavior and how do we live this life. We're playing life on extremely hard mode if you don't l- learn human behavior. So I would say that's one thing. The second thing is evolutionary biology. We teach a lot about how species evolve and how do they make decisions and what are the core motivations that drive everybody, uh, so that's another one I would recommend. And I, I don't want to make recommendations because I, I, I can barely finish a book to, to be honest. So I, I believe in drifting and getting deeper into topics or understand the topics versus trying to say, uh, "Give me these three books and I'm gonna be good." Uh, and the last one I would say is that, um, uh, anything that can make you learn something about their journey versus their success, right? So, um, sometimes autobiographies are too celebratory in some ways, but if you can just kind of understand how they... how did they... If, if any book can teach you how people recovered from a setback in great detail is a great book to learn from.

    6. LRLenny Rachitsky1:11:11

       An audience member on Twitter actually asked a similar question along these lines. If there's one book that you could read over and over and over, what would that be? Is there one?

    7. KSKunal Shah1:11:20

       I, I absolutely don't believe in, uh, reading-

    8. LRLenny Rachitsky1:11:23

       (laughs)

    9. KSKunal Shah1:11:23

       ... over and over, uh, uh, because, uh-

    10. LRLenny Rachitsky1:11:26

        Oh, interesting.

    11. KSKunal Shah1:11:27

        ... I, I, I believe that we are evolving. Things... You might discover the same stuff coming from different books and you'll say, "Oh, I can categorize this in my brain again and again," but, uh, I, I, I think we should... Uh, we, we, we tend to become believers in... It becomes too religious-

    12. LRLenny Rachitsky1:11:45

        Mm.

    13. KSKunal Shah1:11:46

        ... if you repeat.

    14. LRLenny Rachitsky1:11:47

        Yeah. Next question. Do you have a favorite recent movie or TV show that you've really enjoyed?

    15. KSKunal Shah1:11:55

        I, I love Oppenheimer because of-

    16. LRLenny Rachitsky1:11:56

        Mm-hmm.

    17. KSKunal Shah1:11:56

        ... the struggles, but, uh, and, and Nolan's craft of making the movies, but, uh, nothing in the recent past that I feel is right up there.

    18. LRLenny Rachitsky1:12:05

        Do you have a favorite interview question that you like to ask candidates that you're interviewing?

    19. KSKunal Shah1:12:11

        Uh, I like to ask a hypothetical second order t- thinking question. For example, if everybody who's taken a COVID vaccine dies tonight, what happens in 12 months from now? Can you explain the world from what happens to money, what happens to law, what happens to countries, what happens to military, what happens to stock market, what happens to order of things? And, and I would say less than 10% of really smart people can really have good answers, so it tells you how good they are in second order thinking. Uh, but the questions can keep changing. For example, we said that what if arranged marriages were banned in India? I mean, made, made... caught capital punishment for doing arranged marriages. What happens to the country? How do we change from there? Uh, uh, like some absurd scenarios, but then what happens after that?

    20. LRLenny Rachitsky1:13:05

        Not to give away your secret sauce, but what do you look for in an answer that gives you a sense their...

    21. KSKunal Shah1:13:10

        The range of things that they could go into.... and-

    22. LRLenny Rachitsky1:13:13

        Hmm.

    23. KSKunal Shah1:13:13

        ... think about if this happens, B happens, and then C happens, like the, the leaps they could make.

    24. LRLenny Rachitsky1:13:20

        And just so people understand, when, when you're talking about second order thinking, what's the simplest way to describe that concept?

    25. KSKunal Shah1:13:26

        I think the simplest way to think about this is that, uh, being able to correctly judge the butterfly effect of an event in, as close as possible. For example, okay, li- like a lot of people in stock market use that to say how which stocks will go up and down, down. Like that's, there's something that has happened in the market. "Oh, there is a war now in, uh, with Russia," then what happens to the market? Like can you be good at predicting that? But in everything in life, like, uh, if, if this happens... And, uh, a lot of people hate this, uh, because it's very taxing to the brain. Brain, brain absolutely hates second order thinking unless you've trained your brain with second order thinking all the time that it looks forward to it. So it, you know, con- convert this into a hate versus a reward cycle, and that comes with probably doing it probably early on in your life. Uh, later on people hate doing second order thinking.

    26. LRLenny Rachitsky1:14:21

        (laughs) It is, yes, that sounds like a lot of work for the brain. Okay, just a few more questions. Do you have a favorite product that you've recently discovered that you really love?

    27. KSKunal Shah1:14:32

        I'm looking forward for my Vision Pro that is coming soon.

    28. LRLenny Rachitsky1:14:35

        Ooh.

    29. KSKunal Shah1:14:36

        Uh, uh...

    30. LRLenny Rachitsky1:14:37

        It's the future. Future favorite product. Uh, we have actually Boz from Meta coming on as the next guest in my recording. I'm not sure when they come out in sequence, but we're gonna talk about his thoughts.

Episode duration: 1:18:57