Lessons from a 2-time unicorn builder, 50-time startup advisor and 20-time board member | Uri Levine

1. 0:00 – 2:50

   Uri’s background

   1. LRLenny Rachitsky0:00

      You've co-founded 10 different companies. You've been on the board of 20. You've also built two unicorns, including Waze. The biggest startup lesson you seem to have taken out of that is to...

   2. ULUri Levine0:09

      Fall in love. Fall in love. Fall in love. Fall in love with the problem. And then actually what you're trying to do is engage everyone else to fall in love with the same problem, to go into this journey, into this path, and follow your leadership there.

   3. LRLenny Rachitsky0:20

      Anything you wanted to share around hiring/firing?

   4. ULUri Levine0:23

      Every time that you hire someone new, mark your calendars for 30 days down the road and ask yourself one question: "Knowing what I know today, would I hire this person?" If the answer is no, fire them immediately.

   5. LRLenny Rachitsky0:36

      Let's actually talk about fundraising.

   6. ULUri Levine0:37

      Most people are missing the most important slide of their presentation. It's the first slide. This slide is going to be presented for the longest period of time. This is the place that you're gonna put your strongest point. Uh, the second most important slide is the last one.

   7. LRLenny Rachitsky0:52

      (Intro music) Today my guest is Uri Levine. Uri is the co-founder of Waze and nine other companies. He sold two companies for over a billion dollars. He's also been on 20 different startup boards, including a dozen he's still currently on. He's also advised over 50 founders and startups over his career. More recently, he wrote a book that summarizes all of his advice for founders called Fall in Love With the Problem, Not the Solution: A Handbook for Entrepreneurs. In the forward to the book, Steve Wozniak said, "This book will change your life and become your bible if you're an entrepreneur." And I cannot disagree with that. This book is very tactical with amazing stories, and walks you through the ideation phase all the way to exiting your company. In my conversation with Uri, we chat about many of my favorite chapters, including why falling in love with the problem is so important, how to find product market fit, a really clever tactic for firing people who aren't a fit for your company, a ton of really genius tactical advice for improving your fundraising pitch, and so much more. With that, I bring you Uri Levine. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes, and it helps the podcast tremendously. Uri, thank you so much for being here. Welcome to the podcast.

   8. ULUri Levine2:17

      Thank you. Happy to be here.

   9. LRLenny Rachitsky2:18

      Okay, so here's what I've gathered about your career, and let me know if I've missed anything. You've co-founded 10 different companies, including four you're still operating. You've been on the board of 20 companies. You've advised 50, maybe more companies. You've also built two unicorns, including Waze, which you sold for over a billion dollars, which back then was an astronomical amount money. It still is. So does that all sound right? Is there anything big I missed about your career? (laughs)

   10. ULUri Levine2:48

       That sounds about right.

   11. LRLenny Rachitsky2:49

       I think what's

2. 2:50 – 9:01

   Falling in love with the problem

   1. LRLenny Rachitsky2:50

      really interesting to me is that from all of that experience, the biggest startup lesson you seem to have taken out of that is to fall in love with the problem. It's what your book is called. You have a T-shirt that you're wearing right now that you wear in every podcast that says that exactly. Clearly this lesson has struck a big chord with you. I'm curious if there's a moment where you realized that that's the core and that's something that every founder needs to get right. Is there an aha moment? Or is it kind of this progressive like, "Oh wow, maybe this is the secret"?

   2. ULUri Levine3:19

      I'm not sure that this is a certain moment. I think that that was evolving over time, and realizing that, look, at the end of the day, the entrepreneurship journey is, is about value creation. The simplest way to create value is solve a problem. That's the simplest way. And, uh, in my background, I am an engineer, always looking for the simplest way. And uh, and solve a problem is the simplest way. And so this is where fall in love with the problem coming from, and people occasionally would confuse the, m- the T-shirt with the book. And uh, no, the T-shirt is about ten or four, even more years old, and the book is only two years old. So I was wearing those T-shirts for a long while before I wrote the book. And when I wrote the book, that was obvious that this is going to be the name of the book. But there are way more into that, right? So when you fall in love with the problem, then what happen is that the problem is going to serve as the North Star of your journey. And when you have a North Star, you're gonna make less deviation from the course, and you are way more likely to become successful. But also, the story that you are about to tell is way more compelling. Just imagine that we will be here in 2007, just before I started Waze, and I will tell you, "I'm going to build an AI crowdsource based navigation system." You're going to say, "Oh yeah, very interesting." But you don't care. If I will tell you, "I'm gonna help you to avoid traffic jams," then you do care. And when your customer cares, they want you to be successful. And when they want you to be successful, they are going to help you to become successful. And so in that sense, falling in love with the problem is really a key to increase the likelihood of being successful. So in general, I, you know, all of my startups start with a problem. Think of a problem, a big problem, something that it's worth solving, something that the world will become a better place if you solve that. And then ask yourself, "So who has this problem?" If you happen to be the only person on the planet with this problem, I can recommend you a therapist. Don't build a startup. It's way more expensive and takes way longer period of time to build a startup. But if a lot of people actually have this problem, what you really want to do next is go and speak with those people and understand their perception of the problem, and only then start to build, uh, the solution. If you follow this path and your solution works, it's guaranteed that you're creating value. If you start with the solution, you might be building something that no one cares, and that's really frustrating. So falling in love with the problem, this is where you want to start. Now, this is really hard because I'm...... and getting tons of emails every, every week from entrepreneurs, and they all start with what we are doing. And I don't really care what you're doing. What I really care about is why you are doing that, that this is the problem that you solve or the value that you create, or the value that you create for me. This is what really matters, right? And so if you start your story with our company is... or our system is... And in the recent years, it's, uh, everything is our AI system is... or our AI company is... Right? But, but generally speaking, um, if you start your story with that, you focus on your solution. If you start with s- the story with the problem we are solving is, then you focus on the problem. If your story start with the value that we create for you is, then you focus on the user. The last two are way better than focus on the pro- on the solution.

   3. LRLenny Rachitsky6:59

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3. 9:01 – 10:52

   Signs this is a big enough problem

   1. LRLenny Rachitsky9:01

      FDIC. I wanna follow up a couple threads here, because I imagine there's certain problems people fall in love with... Amazing, I'm gonna solve this very obscure problem for my family or a friend of mine. And then they realize this is never gonna be a huge venture scale business, if that's the goal of theirs. You talked about, like, make sure enough people have this problem versus just getting a therapist that's gonna help you with this problem. What are some signals and heuristics folks can use to help them understand this is a big enough problem that it's really worth their time?

   2. ULUri Levine9:30

      So people ask me, "So you send me to speak with users, how many?" And I will tell them, "A 100." You don't need a 100, but the 100 basically say, "You need to get out of your comfort zone and just... It's not just your close friends and family that you need to discuss that. You need to discuss that with people that you don't know." And usually what happen is... And the validation is- is in most cases, it's really clear, right? If you tell someone, "This is the problem I'm going to address." And they will tell you, "Oh, I know someone that has this problem." It's not a real problem. If they will tell you, "No, no, no, no, no, this is not the problem. The problem is..." And they will give you their description of the problem, this is something that you really want to follow. So if you speak with 100 people, but if you actually speak with 20 people that you don't know, you will get validated whether or not this problem is real or not. And, uh, look, it's not the only way to become successful, right? You start with, um... You look at the, um, you know, one of the most successful, um, products in the world, uh, the iPhone, right? And you ask yourself, "What was exactly the problem when they started?" And the answer is that there was no problem when they started, right? There were smartphones and people were actually very happy with them. And so occasionally, we need to invent something completely new. But solving a problem is simply the simplest way to create

4. 10:52 – 12:04

   The importance of passion

   1. ULUri Levine10:52

      value.

   2. LRLenny Rachitsky10:53

      Another element of picking a problem to work on, so you say you fall in love with a problem, is being excited to work on this problem. There's oftentimes problems you find that aren't, like, that exciting to you, or you're not e- excited to work on, like, real estate software, but you find there's a big problem. How important is it that you're personally passionate and excited to work on this thing versus like, "Oh, wow, this is a huge business opportunity, I gotta go after it. It doesn't matter if I'm not that passionate about it."

   3. ULUri Levine11:20

      Fall in love, right? This is really passionate. Really, really passionate. Look, the journey is really hard and complex and long-

   4. LRLenny Rachitsky11:29

      Yeah.

   5. ULUri Levine11:29

      ... and so you have to be in love in order to go into this journey, because otherwise, it's not going to be successful. You really want to be passionate. If you're not passionate about the problem, even though that the problem might be real and big and significant, there is not enough drive, there is not enough internal drive to take you through the hardship of the journey. And so y- you need to be passionate. You need to fall in love. You personally need to fall in love with the problem. And then actually what you're trying to do is engage everyone else to fall in love with the same problem, to go into this journey, into this path, and follow your leadership

5. 12:04 – 13:59

   A pivot example

   1. ULUri Levine12:04

      there.

   2. LRLenny Rachitsky12:05

      Is there an example of a pivot that you maybe went through where you realized the problem was not as big as you thought or you realized there's a bigger problem?

   3. ULUri Levine12:13

      Th- So, so actually there are many, right? So, so Oversea, uh, deals with maybe, um, biggest secret in travel industry. What happened to airfare after you book your flight? Now you have no idea because you never compare prices after you made the reservations. But you know that airfare is going up and down all the time. It's going up and down before you're making the reservation and keep on going up and down after you're making the reservations. So if this is the price that you paid and this is cancellation fees, if the price drops here, you can rebook the same flight at the cheaper price.

   4. LRLenny Rachitsky12:48

      Genius.

   5. ULUri Levine12:49

      If you would only com- keep on comparing prices after that, right? So we started this company that is actually monitoring your own itinerary and, um, and we, um, realized that this is going to be, um, huge benefits to travelers, right? And we started that as a B2C company, direct to consumers, and we realized that even though the people really care, they are not willing to take the action that is required. And we ended up with doing that for corporates. And corporates, they, you know, they are very simple, uh, ways for them to engage that automatically, so automatic rebooking and so forth. And we can save corporates about 10% of their travel budget that goes directly to bottom line. So, so we started that as a, uh, B2C and then we realized that this is, uh, way harder than we think it is and we ended up with converting that into B2B, uh, which turns out to be very successful for us. And so occasionally there are, um, companies that you start your journey with, uh, um, with one perception and you change that and, uh, and that will

6. 13:59 – 21:55

   Where to find startup ideas

   1. ULUri Levine13:59

      happen multiple times.

   2. LRLenny Rachitsky14:00

      That's an awesome example. Okay, I wanna... Before I move on to... I'm kind of thinking about this in the phases of starting a company. So we're talking right now about coming up with the idea that you want to commit to. A lot of people that want to start companies are not sure how to find a great idea. So the core advice you're sharing is find something, find a problem and fall in love with solving that problem in whatever way you can. Do you have any other advice for helping somebody find a problem and finding a startup idea? Where do you find startup ideas? What do you find? What has worked for you mostly?

   3. ULUri Levine14:30

      So for me it's usually personal frustration that leads me to start to think about it whether or not we can change it. I hate traffic jams, right? I hate, uh, lose, leaving money on the table, right? So there are many things that I ran into and I get frustrated and I tell myself, "No, no, no. There must be a, a different way to do that." But in general, look, the problem itself needs to start from, from you, right? Something that really bothers you, something that you care about. And then it's the validations of the problem, that you speak with many people, try to realize. Now if you'll tell me, oh, this is a B2B, then speak with many businesses, right? Speak with those that you believe actually do have this problem and understand their perception. Once you validate that, then there are a few things that you need to realize. One is about the journey itself. This is going to be a multidimensional journey, right? It's gonna be at least three dimensions and, and maybe fourth, right? So, so the, the three dimensions, one is them is, um, it's gonna be a rollercoaster journey with ups and downs and ups and downs and... And look, if you'll tell me that all the businesses in the world have ups and downs, I agree, but the frequency of those when you're building a startup, way higher. I think that I heard the best quote on that from Ben Horowitz, Ben Horowitz from Horowitz Venture Capital Firm and before that he used to be a CEO of a startup and he was asked whether or not he was sleeping well at night and he said, "Oh yeah, I slept like a baby. I woke up every two hours and cried." And that's really the reality of that. The frequency of the differences are so dramatic that there is nothing compared to that, a rollercoaster journey. It's also a journey of failures. Look, we are trying to build something new that no one did before and even though that we think that we know exactly what we are doing, we don't. So we try. We try one thing and it doesn't work, we try another thing and it doesn't work. We keep on trying different things until we find one thing that does work. Now if you realize that this is going to be a journey of failures, then there are two immediate conclusion. The first one is that if you're afraid to fail, then in reality you already failed because you're not going to try. Albert Einstein used to say that if you haven't failed, that because you haven't tried new things before. If you're gonna try new things, you will fail. Michael Jordan used to say that, uh, "You know, I've failed over and over and over and over again and this is what made me successful." And so this is the first conclusion. The second conclusion is that you really want to fail fast. Just think about it, right? If you fail fast, you still have plenty of time to try another attempt and build another version of the product, try another go-to market approach, try a different business model. So you still have plenty of time to make more and more and more attempts and the more attempts that you have, you simply increase the likelihood of being successful. Just think that you play basketball, right? Then you try to score from half court. If you have one shot and you are not Steph Curry, you are very likely to miss. But if you actually have a lot of shots, one of them you're gonna make. That's it. Just think about it. The biggest enemy of good enough is perfect. You don't need to be perfect. You need to be good enough in order to win the market and the way that you are going to become good enough, by the way, is really simple. You start with not good enough and you iterate and iterate and iterate until you become good enough and then you win.The third dimension is that this is gonna be long journey, very long, way longer than you think it is. And the longest part of it is until you figure out product market fit. And product market fit goes into the different phases of building a company. To a certain extent I would say, look, the difference between a corporate and a startup is that a corporate knows this is our value proposition. This is the product that we are selling. This is the pricing of this product that we are selling. This is the target audience. This is how we are going to sell them. This is how we go into the market and we all, all we have to do is keep on executing and hopefully nothing ha- will change over the, over the, over the period of time, right? When you start as a startup, you don't have a product. You don't know what's the business model. You don't know what, what people are going to pay you for. You don't know how to grow your business and you need to figure out all of those. And this is going to be long journey. Now, the longest part is usually figuring out product market fit, and product market fit is really simple. That means that you create value to your customers. If you do not figure out product market fit, you will die. As simple as that. You never heard of a company that did not figure out product market fit, they simply died. That's it. Now, once they do, and for a second, I want you to think of, you know, with all the applications that you're using every day, right? From searching Google, using Waze, WhatsApp, Facebook, Netflix, Uber, whatever it is. And ask yourself, what is the difference between any of those today and the first time that you have used it? And the answer is that there is no difference. We are searching Google today the same way that we search Google for the first time in our life. We're using Waze today the same way that we used Waze for the first time in our life. So once a company figure out product market fit, they don't change their products anymore, because this is the value that they create for the customers and you don't want to change that. What we don't know is how long did it take them to get to this point, right? Beforehand, we never heard of them. And after that, they don't change that anymore. It's a matter of years. For Waze, it was four years. For Microsoft it was five years. For Netflix it was 10 years. Now, if you'll tell me, "Oh, today is very different. Uh, um, ChatGPT just started a year ago." No, they are seven years old. It took them six years until you heard about them for the first time in your life. So it does take time to create value, and this is something that is really significant. Now, at the end of the day, product market fit have one metric, one metric. That's it. Retention. That's really simple. If you create value, they will come back. If they are not coming back, that means that you are not creating value. Now think about your epi- episodes, right? Of the, of the, uh, of this podcast, right? Most of the, of your listeners are returning, right? Because you create value for them and they are coming back. That's like-

   4. LRLenny Rachitsky21:24

      100%. Every single one. Every episode.

   5. ULUri Levine21:28

      Every single... Occasionally there are new one, right? But-

   6. LRLenny Rachitsky21:30

      And there's new ones coming in all the time. Mm-hmm.

   7. ULUri Levine21:32

      ... new one. By the way, this is one thing that, uh, some businesses don't realize n- whether or not they, they are, their customers are going to be new customers or returning customers and, uh, and in many cases they simply fail to realize that upfront and the result is that they are not building the right go-to-market strategy.

7. 21:55 – 29:43

   Finding product-market fit at Waze

   1. ULUri Levine21:56

   2. LRLenny Rachitsky21:56

      We covered a lot of ground there. That was amazing. Um, I'm gonna follow a number of threads of things you just touched on. You talked about product market fit briefly. Uh, what was the moment you felt product market fit with Waze? I don't know if I've ever heard that story.

   3. ULUri Levine22:08

      We started in Israel, and Israel is a small place and we ended up with, um, being very successful in Israel. And then we said, "Wait a minute, Waze crowdsources all the data, right?" Not just, uh, traffic information and speed cams and so forth, but also the map data itself. So we can start from a blank page and the users, while they drive, they create the map and they create traffic information and so forth. And so we figure out that we can start anywhere. And we made l- Waze global at the end of 2009, and, uh, we expect that to work the same way that it did in Israel. But it didn't.

   4. LRLenny Rachitsky22:45

      Mm.

   5. ULUri Levine22:45

      It was not good enough. It was not good enough in the US, it was not good enough in Western Europe, it was not good enough in, in Latin America. It was not good enough in Asia. It was not good enough anywhere that matters, right? It was actually good enough in about four places in the Czech Republic, in Slovakia, in Latvia and Ecuador. And that's about it. Rest of the world, not good enough. So what we did is, um, we spoke with the drivers. Look, they wanted us to be successful. We basically said, "We the drivers are going to fight traffic jams together." So common enemy, togetherness, all goodness. Everyone wanted that to work, right? So people downloaded the app and it simply was not good enough. So they churn, right? Because if it's not good enough, you're not coming back. We spoke with them, we asked them what, what didn't work for them. They told us, because they wanted it to work. And we built the next version addressing everything that they've told us. And we know that this is it. And it's not. So we're doing it all over again. We speak with the drivers, we ask them what didn't work for them, they tell us. Now we build the next version and now we have the conviction that it's going to work. And it's not. Journey of failures, iteration after iteration after iteration after iteration. More than a year of iterations until beginning of 2011 that we actually started to see that working in, in ma- and then it's multiple cases, right? In the US, uh-... one metropolitan after that, right? Los Angeles first and then San Francisco and then Washington D.C. and Chicago and, uh, New York and Atlanta and so forth. In Europe, one country after that, right? Italy first and then France and Netherlands and Sweden and Spain and one country after that. In Latin America, one country after that, or, um, Colombia first and then Chile and then Brazil and then Mexico and then rest of Latin America. In Asia, multiple countries one after that. Not all of them, by the way. Not all of them. Japan is a very good example where it didn't work and it will never work, right? So-

   6. LRLenny Rachitsky24:51

      Hmm.

   7. ULUri Levine24:52

      ... Waze crowdsourced the information, right? Which basically says that as soon as we get to the level of good enough, then we are good enough. House numbering plan in the US it's really simple, right? Every block is 100 numbers, right? And so if I have the map, I can actually count the number of blocks and take you to approximate the, the, the, the right location even if I don't have exactly all the house numbers there. Most of the Western world it's a geographical order, right? So in Israel this is going to be sequential order. Odd number on one side of the street, even number on the other side of the street starting from one end until the end of the street and so forth. So it's enough that I will have few that I can... Few house numbers that I can actually take you to the right place in. In the UK there are, you know, n- s- house number starts on one side of the street and then on the other side they are coming back, right? And so, so there is an order. In Japan, it's chronological order. The oldest house in the neighborhood is house number one.

   8. LRLenny Rachitsky25:54

      Oh, wow.

   9. ULUri Levine25:56

      And then the house number two can be miles away but it's the second oldest house in the neighborhood. And so you have to have all the house numbers unless... And until then you are not good enough. And crowdsource is, uh, um, if you need perfect information, crowdsource may not be the right way to do that.

   10. LRLenny Rachitsky26:17

       Just to close the loop on this question, when you were launching these markets and it wasn't working, were you actually looking at retention at that point? And if so, was there, like, a number you were looking for? Or was it more qualitative, like, it's just taken off off into the right? Like, what were you actually watching back, back in the early days?

   11. ULUri Levine26:32

       Th- that was easier for us because we tried to compare everything to Israel. So we, we looked at the, um, the frequency of use, right? Or h- or when our people are coming back. How, how long does it take them until the next try and until the next try? And generally speaking, um, if you look at something that have high frequency of use then you will be looking at, uh, um, three month retentions of 30, 40, 50% is actually pretty good indication. But usually what would happen is that you would know when they convert. And that's gonna be after, um, you know, the third or the fourth time. And if they are not getting to the fourth time, then they are basically saying, "Okay, we give it a try. We really like the story. We gave it another try and it's not good enough."

   12. LRLenny Rachitsky27:20

       That's a cool heuristic. Do you find that that is useful for other startups, consumer type startups? Or is that just something you think specific to Waze at that point? This idea of coming back for the third time.

   13. ULUri Levine27:29

       It's really depending on the frequency of use, right? If I will tell you that I have a startup that, uh, helps you to file your real- tax returns in three minutes, then okay, that's absolutely amazing. But you're only going to do that next time is next year. Uh, by the way, we did have a startup that it was doing that. It's still a little bit up and running. But, uh, that was really frustrating because the tax authorities shut us down.

   14. LRLenny Rachitsky27:57

       Hmm. You gotta fall in love with the problem. You gotta power through that. Just, uh-

   15. ULUri Levine28:02

       Yep.

   16. LRLenny Rachitsky28:02

       ... change the government. Just kidding. I... The story you told of Waze and iterating is a really good example of falling in love with the problem. You're really passionate about, "I need to... I wanna solve traffic. I hate traffic." By the way, what it made me think about a little bit is, uh, Elon, when he hated traffic, he built, like, the Boring Company and built tunnels underneath underground. And your solution to hate traffic is, "I'm gonna build Waze and, and, and a software app."

   17. ULUri Levine28:27

       So, so look, if I would... You know, we started Waze with the vision that we are going to help people to avoid traffic jams. Now, the reality is that there are more traffic jams today than there were in 2007.

   18. LRLenny Rachitsky28:39

       (laughs)

   19. ULUri Levine28:40

       Obviously, number one, I'm not done. Um, and number two, if you ask people, "What is the value of Waze?" Then it's not about avoiding traffic. It's about creating certainty. And certainty is way higher value than saving time so you know exactly when you're gonna get there and this is, uh, way higher value. And we, by the way, we learned that in the US market when we spoke with people, they told us, uh, "You know, if, if I'm in living in Cupertino and I need to drive, drive up to the c- to San Francisco and I can take 101 or 280, I don't really want to change my route unless there is something dramatic. But what I really want to know is how long it's gonna take me, right? So I'm gonna stay on the 101. I'm not going to get into Service Road. I'm not going to take El Camino Real. I'm not going to try something else. I'm gonna stay on the 101. Just let me know how long it's gonna take." So certainty creates way more value than, um, uh, than

8. 29:43 – 36:45

   The different phases of a startup journey

   1. ULUri Levine29:43

      saving time.

   2. LRLenny Rachitsky29:44

      I wanna talk through a couple other of the chapters in your book. So chapter four is around the different phases of a startup journey. And your core advice is that it's important to focus on one thing at a time in each of these phases. And the first phase, you call it the, uh, all over the place phase, I think, or yeah, the all over phase. And the idea is you need to get outta that as soon as you can and then focus. Can you just kinda talk through these different phases and what you think people do wrong along those... Along the phases. Maybe they got... They get them wrong or they focus on the wrong things in each phase.

   3. ULUri Levine30:17

      So, so, you know, initially you think about your new idea from multiple perspective, right? This is the problem, this is how the solution is going to look like, this is what I'm gonna do next year, this is my 10 years vision, this is my business model and so forth. So you think about everything. But you actually need to execute only one thing. Now, this one thing is figuring out product market fit. It's not one thing, right? You, wait, wait a minute, you also need to build an organization and you want that organization to be something that you really like. And so there are a lot of operational stuff, but you need to figure out product market fit. As we said earlier, if you don't figure out product market fit, you will die. If you do, then you get to live and die another day. And the other day is whether or not you're gonna figure out how to grow your business and whether or not you're gonna figure out your business model. Now the good news is that I will tell you that if you create value, you will figure out a business model. At least for the people that you create value for them, they are most likely willing to pay. Now, if, if, in general, I'm not saying that this is the only business model that, that is viable, but if you create value, we, you will figure out a business model. But figuring out a business model is a journey by itself. And guess what? It's going to be a long roller coaster journey of failures. When we started Waze, we thought that we're gonna sell map data and traffic information and we ended up with doing advertisement. Very different business model, because we realized that it's not for us. It's, it's too long sales cycles. We were very, you know, mobile internet dynamic company and selling to government is not exactly what we wanted to do. And so we ended up with a different business model, but with a lot of reasoning why this is the right business model for us and, and figuring out growth. Look, if I were to ask 100 people on the street, "How did you hear about Waze?" They, 95 of them, if not 99 of them, will tell me, "Someone told me." Word of mouth, right? So everyone wants to have word of mouth. Word of mouth you can only have if you have high frequency of use. If you're doing tax returns once a year, even if you really like the experience, then once a year you're gonna tell someone else. If you're using Waze every day, then every day you have an opportunity to tell someone else. So word of mouth, even though that everyone would like that, it's only going to happen if you have high frequency of use. So those phases requires different focus of the company, right? Initially, if you focus on product market fit, then you don't need sales. You have no product to sell. You don't need business development, you don't need even marketing. You need product, you need developers, and you need product, uh, product lead to define the product and lead through the iterations of the product until we get to the level that it's good enough. Uh, once you get there, you shift gears. If the product doesn't change, if we search Google the same way that we search Google for the first time in our life, then the product development is now not going to be focused about value creation. It's going to be focused about either figuring out business model or figuring out scale, right? And the entire company shift gears and move to a different phase. Now this is really hard. Just think about it. If up until now the product development group was the only things that matters, all of a sudden we think about marketing now because we are now in the go-to-market phase, that this is the most important thing of the company. Occasionally, I found companies that have challenging and shifting gears, right? So, um, so they didn't figure out where the clutch is. And you have to, because otherwise you stuck in the previous phase that you kind of, you know, finished that journey. This journey is nearly done and, and you need to shift gears. And, uh, if you don't do that, then you get stuck. If you do that, uh, if you try to do multiple things at the same time, you will fail. Focus is not about what we are doing, it's about what we are not doing. These are the hard decisions.

   4. LRLenny Rachitsky34:50

      I like that. So the four phases, just to briefly summarize, it's kind of like come up with the idea, find product market fit, then it's a question of should you keep focusing on growth or should you figure out the business model before focusing heavily on growth. And your advice sounds like if it's high frequency, word of mouth driven, focus on growth, and then you figure out business model later. If not, figure out how you're gonna make money and then figure out growth.

   5. ULUri Levine35:15

      Exactly. Because if, if you have high frequency of use, you will end up with, uh, growth coming by itself, right? Word of mouth. And therefore you should, uh, do that at the beginning. If you don't have high frequency of use, you are sentenced to acquire users or customers all of your lifetime. And if this is the case, then you really want to figure out the business model before you start and go and do that.

   6. LRLenny Rachitsky35:41

      That's really helpful. I think actually a counterexample to your, uh, point about how frequency of use is necessary for word of mouth growth is Airbnb. Something like 70% of Airbnb growth is word of mouth, and frequency of use is actually really low. It's like once or twice a year. And I wonder if it's because the experience is so unique and special that it still works and enough people travel enough times/if it was a higher frequency, it would've grown even faster, I imagine.

   7. ULUri Levine36:09

      High frequency of use is the simplest way for word of mouth. The other thing is coolness.

   8. LRLenny Rachitsky36:13

      Mm-hmm.

   9. ULUri Levine36:15

      If it's really cool-

   10. LRLenny Rachitsky36:16

       Mm-hmm.

   11. ULUri Levine36:17

       ... then you'll tell more people.

   12. LRLenny Rachitsky36:18

       Mm-hmm.

   13. ULUri Levine36:20

       ... and Airbnb was, um, really cool at the beginning of the journey, right? So, now everyone knows about the Airbnb, but when they started that was way cheaper and really unique experience than, um, than hotels.

   14. LRLenny Rachitsky36:36

       It's still actually mostly word of mouth. Uh, I think it was probably higher initially, but it's still, like, almost 70, 80% driven by word of mouth, so it's still cool enough. (laughs)

   15. ULUri Levine36:44

       (laughs)

9. 36:45 – 39:51

   What investors don’t want to hear

   1. ULUri Levine36:45

   2. LRLenny Rachitsky36:45

      Good for them. Um, you have a couple quotes that I wanted to share, which are along the lines of things you shared. One is just, uh, you have this kind of, "What's the most important stage at a company? They all are, but one at a time." I love that line. The other is, "The main thing is to keep the main thing the main thing," the same advice you just shared. Just like focus. So you're in the PM- product market fit phase, focus on that. Don't think about growth yet. Don't think about business model yet, necessarily. I know investors are gonna push you to figure these things out, and you'll have to have some story of like, "Here's how we might make money. Here's how we think we're gonna grow," right? You need to think about that a little bit, but maybe you don't. Make that the focus.

   3. ULUri Levine37:22

      So, this is one of the areas that investors don't like to hear the truth, right? The truth is that I don't know how I'm going to bring the users. I will figure that out once I get there. But the reality is that right now I don't know, but they don't want to hear that. What they want to hear is that, "Oh, I know exactly how I'm gonna bring them," and what I will say is that, "I know exactly where I'm going to start my experiment." But, but, uh, most of the investors would like to see a coherent story that makes sense, right? This is our business model. This is how we gonna make money. This is what we gonna sell. This is how much they are going to, to pay. This is why it's a simple business model, and this- these are the comparable to this business model.

   4. LRLenny Rachitsky38:03

      Yeah. Mm-hmm. But investors have the final word, unfortunately, right? They decide if they wanna invest or not.

   5. ULUri Levine38:09

      Yeah.

   6. LRLenny Rachitsky38:09

      And so if your story is not compelling, they're gonna be like, "All right, we'll find someone else."

   7. ULUri Levine38:13

      You know, it's, um, seasonality, right? There are periods of time that, uh, uh, raising capital is easier and then, um, many of the entrepreneurs will be choosers and not beggars. And, uh, there are periods of time that it's the other way around, and most of the entrepreneurs will be beggars and not choosers.

   8. LRLenny Rachitsky38:32

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10. 39:51 – 48:00

    Fundraising tips

    1. LRLenny Rachitsky39:51

       conditions apply. Let's actually talk about fundraising. It's, uh, a topic I wanted to spend a little time on. How much money have you raised for the companies that you've started, total, roughly?

    2. ULUri Levine40:02

       So Ways raised about $50 million throughout the entire journey. Um, we started by raising, um, 12. Um, that was this- the first, uh, investment round. And then we raised, um, 30. And, and then there was the last round that we raised, uh, actually not a lot. Um...

    3. LRLenny Rachitsky40:23

       That's a surprising small amount of money to raise for the outcome.

    4. ULUri Levine40:28

       In general, I would say Israeli startups are leaner than American startups, and, and so they would, um... You can raise less money-

    5. LRLenny Rachitsky40:36

       Yeah. That's amazing.

    6. ULUri Levine40:37

       ... and, uh, at way lower valuation, unfortunately, and, uh-

    7. LRLenny Rachitsky40:40

       Mm-hmm.

    8. ULUri Levine40:41

       ... end up with, um, pretty successful results.

    9. LRLenny Rachitsky40:44

       That's amazing.

    10. ULUri Levine40:45

        Uh, raising capital. Um, you know, it's a journey by itself, and, and different from the other journeys that you need only once. Raising capital is going to happen multiple times. And if we say that building a startup is a rollercoaster journey, then I would say, um, raising capital is a, a rollercoaster journey in the dark.

    11. LRLenny Rachitsky41:07

        It's like Space Mountain.

    12. ULUri Levine41:09

        Yeah, sort of. And, and, and one of the reason is that this is a different ballgame, and you don't know how to play at the beginning. I would say a few things about, uh, raising capital for the first time. Um, number one, it, um... You know, I spoke with, uh, um, many investors, and, and one of, um, the conversation that I had that I really, really resonate with me was, uh, when I spoke with, um, one of the leading VC in Israel and asked their partner, "How long does it take you to decide if you like this, the... You know, the entrepreneur or not?" And he asked me, "Do you want the right answer or the real answer?" I say, "You know, I heard the right answer so many times. Give me the real answers." And we are sitting in a small meeting room. So the guy is looking at me, and then looking at the door, and looking at me again, and says before they sit down. I say, "Oh, no, no, no. S- say that again," right? That's the first impression. Now, we all have first impression. How long does it take you to decide if you like a candidate or not? Second, you go on a date, how long does it take you to decide if you like the date? Second. And then maybe there are a few more minutes that you allow yourself to either change your mind or let that first impression solidifies, right?Now, if this is the case and you're looking to raise capital, start with the strongest point at the beginning. Whatever it is, and I don't care if this is the size of the problem, this is the traction that you have, this is the team that you've built. I don't care what it is, start with that. Because by the time you'll get there, they might be already setting up their mind, then start with the strongest point at the beginning. And then, by the way, finish with that as well. Um, so this is the first, uh, um, conclusion. The second conclusion is that I spoke with, uh, um, early stage investors, right? Those that invest the first money. So company has a story to tell. That's about it, right? No traction, nothing yet, uh, is built and so forth. And I asked him, "Why did you decide to invest in this company, and this company, and this company?" And I spoke with many investors, and what I heard was actually pretty consistent. "I like the CEO, I like the story. That's it. I like the CEO, I like the story." Now, if this is the case, then there are two immediate conclusions. The first one is that the CEO goes alone to the meeting. "I need the headlight on me. I don't need any distractions. I don't need my team members. I don't need anything else in the room, just me." Because if, if I bring other people then, at the end of the day, they might say, um, "Yeah, I like the team, but they didn't like..." The, the CEO was not specific, right? Was not unique, was not jumping out of the pages. So CEO goes along and tell the story. The other part is that they need to tell a good story, and good story is not about facts. It's about creating emotional engagement. It's about creating the sense that the listener would like to be part of this story. And for investor, it's two things. Number one is that they, they want to believe that this is usable, and number two, they want to believe that you can build it. And this is the story that you need to tell. Now, I would say always start with, uh, the problem, right? Because, uh, guess what? Investors are also users. If they don't think that they're gonna use it, so if it's relevant for them and they don't think that they're gonna use it, they will basically dismiss that. They will basically say, "The market is not there." So these are two main things. The third thing is, um, it's a different ballgame, right? So if you have a product and you tell the story to potential customers, the right order of magnitude is that about one-third of the listeners will buy. So in a more mature company, their pipeline is going to be three X in order to sell at the end of the year one X. One-third are going to say yes. In investors, it's 1%. Not one-third, 1%. So you're gonna hear 100 times no until you hear one o- one yes. And that 100 times no is something that you need to understand from the beginning, because that's really discouraging, right? You go and speak with investors and they tell you... I call that, um, they open up the big book of excuses, why not? But in general, they are not going to invest, right? Now, you look at it from the other side. A venture capital partner is likely to see, uh, between 100 and 200 companies a year, and invest in one or two. 1%. That's it. So if this is the case, then it's gonna be the, same case for you. One out of 100. If you want to increase the likelihood, learn how to tell a good story, start from the strongest point at the beginning. Remember that they are users too, so their emotional engagement is going to come through the usage, the use case, and not through, um, how big the business is.

    13. LRLenny Rachitsky46:33

        Mm-hmm. I love the summary at the end. I love that you summarized (laughs) your points, 'cause I try to do that. You did my job. Uh, I love this phrase you have in your book, the dance of the, of 100 nos.

    14. ULUri Levine46:44

        You know, at the beginning, you, you, you look at it and, and you say, "Okay, they, they said, uh, they are not... They decided not to invest because of XYZ," right? Whatever it is, right? Google can do that in no time, or the market is not big enough, or the market is complex or whatever it is, right? And, uh, and then you try to argue, and, and you don't know that it's useless, right? It's like, you go on a date and she said, uh, no, and you try to argue, right? No, this is... There is nothing to argue anymore, right? That's no.

    15. LRLenny Rachitsky47:15

        (laughs) Yeah. I, I look at a lot of startups too. I do a bunch of angel investing and I... Like, yeah, if it's not gonna be a fit, I'm not, I'm not... I'm- It's just not gonna work. And, and I could spend all this time trying to explain it to you, but it's, nothing's gonna change.

    16. ULUri Levine47:29

        (laughs)

    17. LRLenny Rachitsky47:29

        And because there's other startups out there is a big part of it, right? You just wanna pick the things you can-

    18. ULUri Levine47:33

        Yeah.

    19. LRLenny Rachitsky47:33

        ... that are the best, not necessarily things that are good ideas. Um, I really like this idea of starting with your strongest point. That's such an important tactical piece of advice. To your point, investors make decisions really quickly. And so starting with something that really catches their attention, it makes so much sense because once you feel like, "Oh, wow, maybe this is a thing," your whole brain is starting to look at it from a, "Oh, yeah. Okay." Like, you have a positive bent on everything you're hearing versus like, "No, no, no. This is never gonna work," and everything is already

11. 48:00 – 50:30

    How to make your presentations stronger

    1. LRLenny Rachitsky48:00

       biased.

    2. ULUri Levine48:01

       So I would add here another very strong advice.

    3. LRLenny Rachitsky48:06

       (laughs)

    4. ULUri Levine48:07

       Most people are missing the most important slide of their presentation. The most important slide of your presentation is the first slide. Not the one that you think about. It- The first slide, the one that says Company XYZ Intro.

    5. LRLenny Rachitsky48:24

       Mm-hmm.

    6. ULUri Levine48:25

       This slide is going to be presented for the longest period of time.

    7. LRLenny Rachitsky48:29

       Wow. That's a good point.

    8. ULUri Levine48:31

       ... the longest period of time in the presentation, this slide is going to be presented on the screen and you didn't say anything there. This is the place that you're gonna put your strongest point.

    9. LRLenny Rachitsky48:45

       I love that. Is there an example of someone that did that or w- or did you do that when you were startups? What, what do you put there?

    10. ULUri Levine48:50

        I do that all the time.

    11. LRLenny Rachitsky48:52

        What's an example of something you put on that slide? That's such a good idea.

    12. ULUri Levine48:56

        Maybe size of the market, maybe description of the problem. Whatever it is, right? The strongest point is there. Uh, the second most important slide is the last one. Not the summary, the one that says thank you. That's the time to repeat that. So most of their presentations will end up with, uh, you know, um, thank you and my email, right? And, and this is going to be the last slide, right? Which makes sense. You just missed the opportunity. This is going to be the second-longest displayed slide of the presentation. Maybe the first.

    13. LRLenny Rachitsky49:39

        Yeah. Everyone's sitting there chatting, asking you questions. That's so smart. Uh, are there any more of these tips, uh, sitting in your head to share? 'Cause these are awesome.

    14. ULUri Levine49:49

        I, I do a lot of public speaking and usually my last slide says, uh, one more story. And I decide on this story based on the audience and the dialogue so far and so forth. But I have ma- many of stories, many last stories that I would like to tell. The important part is that no one is going to cut you off the stage if you have just one more story.

    15. LRLenny Rachitsky50:13

        Mm-hmm.

    16. ULUri Levine50:15

        And so this is where you can recap everything. This is where you can do whatever you want, right? Because no one is going to tell you, okay, time is up.

    17. LRLenny Rachitsky50:26

        Right. And they're not impatient. They're like, okay, it's almost over. Let's just let 'em finish.

12. 50:30 – 53:44

    A wild fundraising story

    1. LRLenny Rachitsky50:30

    2. ULUri Levine50:31

       Exactly.

    3. LRLenny Rachitsky50:31

       Yeah. I love that. Uh, speaking of stories, is there... What's the wildest fundraising story that you've been through? Is there one that comes to mind of like, holy shit, I can't believe that happened, or I can't believe that worked out.

    4. ULUri Levine50:45

       One of the earlier startups that I was guiding was about, um, um, eventually rolled into gift cards, but, uh, but in Israel, when you return something to the store, you don't get your money back. What you get is a, uh, is a gift card for that particular store, right? And obviously if you return something, then it's not necessarily that you have something to buy in this store. Um, and you ended up with having a gift card that is never being used. And, uh, and so why not sell this gift card, right? What happened is that, um, I heard the story of the CEOs and I thought that the story is not good enough. And I told them, look, you have to tell a better story. And they asked, can you give me an example? And I said, yeah, just imagine that, um... And then there was a long story about, uh, the microwave, um, stop, uh, working and I bought a new one and, and, and really long, long, long story about, uh, with the details, right? How, how do you make a story bel- make-believe? With details. Right? The more details people think that this is real, right? If there are no details, then this is not real. And so I told him this story that was like five minutes explaining trying to fit the microwave into the, the closet and it didn't fit in and into the cabinet and it didn't fit in and I had to return it to the, to the box and so forth, and whole story. And, uh, um, and then I spoke with, uh, um, an investor in Israel and I told him about this new company that I'm going to invest in. I told him the same story about this microwave, right? And he say, "This is interesting. I would like to, uh, to meet the CEO."

    5. LRLenny Rachitsky52:20

       Mm-hmm.

    6. ULUri Levine52:21

       And he met the CEO and CEO told him exactly the same story about the microwave. And when I tell that they says, my microwave, right? This is personal. This has happened to me.

    7. LRLenny Rachitsky52:32

       (laughs)

    8. ULUri Levine52:33

       And, um, and, and so he called, the investor called me up later. He said, this is, you know, he told me the exactly the same story. So that was really funny. But, but at the end of the day, you, um, one of the things that makes story authentic is details. Because otherwise it's not, right? So if you're gonna tell me, okay, this is the use case of the product, and you end up with explaining a use case in, in three lines, this is not authentic. If you watch your real users, then what happen is that you actually, and you speak with them, then you have the authenticity to, uh, to tell a, a good story. Really, really critical. If you want to tell user story, these needs to be real or you have to learn how to tell a story with m- with many details.

    9. LRLenny Rachitsky53:29

       But interestingly, it sounds like the story itself doesn't have to have happened to you in real life. It could be a made up story, but with a lot of details is, is, is the lesson there?

    10. ULUri Levine53:38

        Yep.

    11. LRLenny Rachitsky53:38

        Interesting. Hmm.

    12. ULUri Levine53:40

        If you, if you tell it very briefly, then it doesn't sound

13. 53:44 – 59:48

    Firing and hiring

    1. ULUri Levine53:44

       right.

    2. LRLenny Rachitsky53:44

       Mm-hmm. Amazing. And any other advice along those lines? I wanna talk about two more chapters before we wrap up. Is there anything else around fundraising that you think is important for people to know?

    3. ULUri Levine53:54

       So I will tell you which, uh, chapters I would like to speak about.

    4. LRLenny Rachitsky53:57

       Let's do it. Well, I wonder what they are. I wonder if they're the same.

    5. ULUri Levine54:01

       Understanding users and firing and hiring.

    6. LRLenny Rachitsky54:04

       Okay. Firing and hiring. That was on my list. Okay. Let's, let's start there. And then understanding users wasn't, but, uh, I'm excited to hear what you have to say there.

    7. ULUri Levine54:14

       So, um, you know, I sent the book proposal to many publisher and there is one chapter that says firing and hiring. And many of them came back and say, "Oh, it should be hiring and firing." And I said, uh, no. Firing is hard decision. Hiring is easy decisions. You have to first of all learn how to make the hard decisions. Now, the inspirations from, for, for this chapter came from-... many dialogues that I had with entrepreneurs that their start-up failed and asked them, "Why? What happened?" And about half told me the team was not right. And I kept on asking, "Okay. What do you mean the team was not right?" And what I heard the most is, you know, "We had this guy, not good enough, and this guy, not good enough." So this is what I heard the most. Another thing that I heard quite often is that we had, um, communication issues, right? Something that I actually called, uh, ego management issues. And then I asked them the most interesting question. "When did you know that the team is not right?" Now the answer was actually rather scary. All of them told me within the first month. Then we said, "Wait a minute. If you knew within the first month that the team is not right and you didn't do anything, the problem was not that the team was not right. The problem was that the CEO did not make hard decision." Making hard decisions is hard. Making easy decisions is ... This is, this is why no one likes to make the hard decisions, 'cause you need to live with the consequences. In a small place like a start-up, the hard decisions will always go to the top. Now if the CEO does not make that hard decisions, the result is always the same. The top performing people would leave. Now they would leave because they don't want to be in a place that is unable to make hard decisions. And they have a choice. The nature of the beast is different. Start-up is a small organization. Just imagine that you're in a small organization, right? Could be a team, whatever it is, right? 10, 20, 30 people. And there is someone that shouldn't be there. And I don't care if that someone shouldn't be there because they are way underperforming or because they are assholes. I don't really care. They shouldn't be there. Everyone knows. Everyone knows and the CEO doesn't do anything. That's the nature of the beast. And this is why the top performing people would leave. Now building a start-up is really, really hard. Right? It's hard if you have the right team. But if you have people that shouldn't be there that are still there, and the top performing people are leaving, then it's going to be mission impossible. The conclusion of this chapter is really, really interesting. Right? If, if everyone knows within a month, and every time that you hire someone new, what I really want you to do is mark your calendars for 30 days down the road and ask yourself one question. Knowing what I know today, would I hire this person? At the end of the day, I like to nail that into yes or no, right? Because this is where decisions are being made easy. If you ask yourself that question, if the answer is yes, then go to this person and tell them that you're real excited that they have joined there exceeding your expectations and give them more equity. And you buy their loyalty for life. If the answer is no, fire them immediately. They're already set on a trajectory of not being successful. And they're creating damage to you, to the rest of the team, and to themself, right? They deserve to be successful but it's not going to happen here. They deserve to find someplace else that they can be successful. But it's not going to happen here. And that decision is really, really dramatic. Now in many cases with hard decisions, we know what is the right decisions. We're looking for confirmation. If you look for confirmation then go and speak with the top performing people and tell them, ask them the following, right? Assuming XYZ person is, is going to leave, how sore are you gonna feel? And you will be surprised that they are going to tell you, "Oh, it's not a big deal." This is your confirmation.

    8. LRLenny Rachitsky58:40

       Yeah. We had, um, Elizabeth Stone from Netflix, the CTO of Netflix on, and she talked about this thing they called the keeper test which is exactly that, where every manager is always asking themselves, "If this person were to leave tomorrow and tell me they're leaving, would I fight to keep them? And if not, I should just ... I need to let them go." And that's always top of mind for managers there.

    9. ULUri Levine59:00

       You know, one of my companies had a pretty good year and uh, and they decided to, um, to have an ... annual bonuses to, um, by and large to nearly all of the employees. And then I asked the CEO, "So h- how did you end up with the list?" And he said, "Okay, we had uh, these people that getting, um, you know, was twice as much as the others, and then the others, and then there are four people that uh, are not going to get anything." And I asked him, "Are they still here?" They shouldn't be here, right? If they are so much underperforming then they shouldn't be here.

    10. LRLenny Rachitsky59:33

        Mm-hmm.

    11. ULUri Levine59:34

        But, uh, but generally look, you, you need the time to ask yourself the tough questions because only then you can answer them, right? If you don't ask the tough questions, then you don't answer them.

14. 59:48 – 1:04:10

    The 30-day test

    1. ULUri Levine59:49

    2. LRLenny Rachitsky59:49

       Yeah. I really love this very tactical piece of advice which I was definitely gonna touch on of putting a calendar entry into your calendar when you hire someone 30 days in to remind yourself, asking yourself, "Would I hire this person knowing what I know now? And if not, you should probably let them go."

    3. ULUri Levine1:00:06

       By the way, I can tell you that for everything in your life, right?

    4. LRLenny Rachitsky1:00:09

       Mm.

    5. ULUri Levine1:00:10

       Everything in your life, ask yourself, um, knowing what you know today, would you do something different?

    6. LRLenny Rachitsky1:00:16

       Wow.

    7. ULUri Levine1:00:17

       And if the answer is yes, then do something different today. Today is, um, the first day of the rest of your life.

    8. LRLenny Rachitsky1:00:23

       That is, uh, powerful advice. So, eh, what I'm thinking there is like if I bought something, maybe return it. Is there ... What else, what else have you applied that to in your life?

    9. ULUri Levine1:00:31

       In re- relationship in general. Um, directions that you're going, right?

    10. LRLenny Rachitsky1:00:38

        Mm.

    11. ULUri Levine1:00:40

        Do you still like that? I, you know, I have, uh-... five children and, uh, and they're all between, you know, in their 20s and, uh, and beginning of 30s and, uh, and they struggle with their career path, right? And I basically tell them, "Look, if you are going to work in a place and you don't like it, then what I want you to do is ask yourself why you are not liking it and whether or not there is something that you can change. And I'm gonna ask you of the same question in 90 days from now and if this still is the case, then quit."

    12. LRLenny Rachitsky1:01:12

        Mm-hmm. And it's interesting that you make that 90 days, which it kind of implies some decisions you need to wait a little bit more. You need more data, you need more time than necessarily 30 days but set some kind of timeline.

    13. ULUri Levine1:01:24

        If you don't set a timeline, it will never happen.

    14. LRLenny Rachitsky1:01:28

        I think the other really interesting implication here is most decisions are a two-way door. Most decishons, de- decisions you can change your mind. You can quit, you can leave a relationship. I was gonna s- I was thinking you were gonna say with your five kids, 30 days after they're born do I, well do I still want, uh, this kid 30 days, uh, with the knowing what I know now? (laughs) I'm glad you didn't go there.

    15. ULUri Levine1:01:47

        Um, that, you know, it's a ... No, this is different, right? You go into this journey of having children with the understanding that this is long journey, right? You go into this journey of building a startup with the understanding that this is a long journey, right? The fact that it's gonna be hard, okay, so it's hard. It is hard by the way.

    16. LRLenny Rachitsky1:02:12

        Mm-hmm.

    17. ULUri Levine1:02:12

        But, uh, but yeah, you, um, um, the, the, uh, decisions that, um, obviously they need to be relative to their duration, right? So, uh, so, so yeah, raising kids is a long journey.

    18. LRLenny Rachitsky1:02:29

        (laughs) And a one-way door also. Is there anything else you, you wanted to say around the hiring and firing concept? Clearly firing is the, is the main lesson here, is get really good at firing, and firing quickly and decisively.

    19. ULUri Levine1:02:41

        You know, there are tons of advices in, in the book and they eventually I will tell even in the hiring process, right, most of us are going to interview candidates and then decide that they like or dislike the candidate, right? But they don't know. Then speak with someone that does know. Speak with the reference.

    20. LRLenny Rachitsky1:03:02

        Mm-hmm. Do you have a favorite question you like to ask references? Is there something that you find is really helpful to tell you, tell you, uh, give you a honest insight?

    21. ULUri Levine1:03:10

        For a reference?

    22. LRLenny Rachitsky1:03:10

        Yeah.

    23. ULUri Levine1:03:11

        That's really simple. Would you hire him?

    24. LRLenny Rachitsky1:03:14

        Mm-hmm.

    25. ULUri Levine1:03:17

        Or would you hire her, right?

    26. LRLenny Rachitsky1:03:18

        Mm-hmm.

    27. ULUri Levine1:03:19

        So essentially at the end of the day, you want to nail it into yes or no.

    28. LRLenny Rachitsky1:03:26

        Yeah, and hope that they're being honest. That's, uh, sometimes a challenge.

    29. ULUri Levine1:03:31

        No, if they will tell me yes, then I would ask them, "Why didn't you?"

    30. LRLenny Rachitsky1:03:36

        (laughs)
15. 1:04:10 – 1:12:08

    Understanding users

    1. LRLenny Rachitsky1:04:10

       Okay, amazing. So let's do one more chapter. The one I was gonna pick, you choose what you're more excited about, is selling a company, your last chapter, Exit. The one you were thinking about going to is Talking to Users. I imagine that's much more applicable to more people, so that's probably the better choice, but your choice.

    2. ULUri Levine1:04:28

       Okay, then let's stick with Understanding Users. Um, uh, Steve Wozniak, co-founder of Apple, wrote the, um, the foreword to my book and he called that book The Bible for Entrepreneurs. And when I sent him the first chapter he said, "Wow, I wish I had that when I started." I met Steve Wozniak for the first time about, um, 10 years ago. We spoke at the same conference in Guatemala.

    3. LRLenny Rachitsky1:04:55

       Mm-hmm.

    4. ULUri Levine1:04:55

       And look, when I grew up, Steve Wozniak was my technological guru, right? So he was, uh, the most important person in my, in, in the technology space in my mind. And then we spoke at the same conference and we had dinner the night before, and the only thing that actually was really important for me is, uh, to have a selfie with, uh, with, with my idol, right?

    5. LRLenny Rachitsky1:05:21

       (laughs)

    6. ULUri Levine1:05:21

       And so I took out my iPhone and, uh, with the iPhone you can take pictures by clicking here on the screen or using the volume button on the side, right? And so I took a selfie with him holding the phone like that and clicking on the volume button. And he said, uh, "Finally." And I said, "Finally what?" "Finally someone using it the way that I meant it to be." Now, you realize that there is no right or wrong. There are different people that are using different products in a different ways. And occasionally if I would have large audience, then I would ask the people, "Okay, how do you use Waze," right? So, so you go to your destination and you enter destination and then Waze guides you through the screen with the display of the, of the maneuvers that needs to be made? Or with the audio guidance of, uh, you know, turn right, turn left, and so forth? If you're watching the screen, raise your hand. And then I would have about 70% of the people ra- raise their hand. Then ask people to watch around them and see those people. Then ask, uh, if you are listening to the audio prompts raise your hand. Then I have about, uh, 20 or 30 more percent of the people raising their hand. And again, I send people to watch around and see those hands, right? There is no right or wrong. Different people are using it differently. Now, if you are using Waze in a certain way...Up until this moment, you didn't know that there are other people that are using it differently. And to be frank, you don't care. You getting your own value the way that you get it, and you don't really care that there are other people that are getting it differently. But if you're building a product and you don't know that, then you are building the wrong product. You don't know that there are other people that are not like you, and you think that you're building the product for yourself, then you're making a big mistake. And the way to figure it out is, by the way, two things. Number one, watch new users. Simply watch users and see what they're doing. And number two, if they're not doing what you expect them to do, then ask them why. Because this why is the one that is going to make your product successful. You understand the why and the next version you're going to address that. Now, this is in particular when it comes to understanding users. Obviously, there are a lot of users, but we can group them into several groups of their ability to adapt something new. And something new is not necessarily new technology, right? We think about it as a new technology, but it's not necessarily about technology, it's about new behavior, right? And then we look at the entire population, and every time that we look into large numbers, they will have normal distribution, right? So the bell curve of the distribution, and then we will have about 2% of the populations that they're, uh, the innovatives. The innovatives are going to use something new because it's new. That's it. They care about this, uh, subject, and they're going to be the first one to hear about it, and they're going to try that out because it's new. The second group is usually what we will get to see as the first users are the early adopters. As soon as they realize that there is value, they're gonna give it a try. And if there is value, then they will keep on using it. And if there is no value, then they will, um, then, then they will quit. The third group is the most important group. This is where market leaders are, right? This is called the early majority. This is about one third of the population, and the one that wins the early majority wins the market. The challenge with those group, with the people in this group, is that they're afraid of change. So their state of mind is, "Don't rock the boat. Whatever I'm currently doing is good enough for me." So if you have salesforce.com, which is absolutely amazing, their reaction is going to be, "What's wrong with Excel?"

    7. LRLenny Rachitsky1:09:29

       (laughs) .

    8. ULUri Levine1:09:31

       And because they're afraid of change, they are not going to try something new. Now, the reason is that at the end of the day, they're afraid that this is going to be too complex for them, and they will not get it. And they don't want to be embarrassed, and they don't want to feel like idiots. And, you know, guess what? People don't like to feel like idiots. And so they are not going to try. And you need to see those people to understand their barriers for starting to use your service. And by the way, the solution is always the same, simplicity. Leonardo da Vinci say that, uh, "Simplicity is the ultimate sophistication." If you want to make it simple, in your journey of building a product, we basically say this is iterations and iterations and iterations. In many of those, you add features and you add features and you add features, until you, all of a sudden, you add the features that people are using. What you really want to do next is remove the rest of the features that people are not using, because they're adding complexity. Now, most of the product owners, they're either innovators or early adopters. You cannot understand an early majority person. If you belong to one group, you cannot understand a person from the other group unless you watch them and ask away. So the most important part of understanding users is actually seeing those users. And they're not wrong. This is how they behave.

    9. LRLenny Rachitsky1:11:09

       So a couple threads there I'll pull out. One is, look for surprising uses of your product, because as you said, you'll realize, oh, some people are using this in a way that I didn't expect. And it'll remind you, people are not the way you are, and don't assume that they're gonna want exactly what you're building. So pay attention to things that surprise you. We had Geoffrey Moore on the podcast, and he talked through a lot of this stuff. And one of the lessons there to help you bridge that gap from, uh, to the, what is it, the third group, you, how did you describe it? The late, late, uh, majority?

    10. ULUri Levine1:11:42

        The early majority.

    11. LRLenny Rachitsky1:11:42

        Early majority. Uh, is-

    12. ULUri Levine1:11:43

        Late majority will never use the product.

    13. LRLenny Rachitsky1:11:45

        Yeah, laggards.

    14. ULUri Levine1:11:45

        They will use your product only if they have to.

    15. LRLenny Rachitsky1:11:47

        Yeah. The laggards, I think he calls it. Um, they look for basically reference- references. People telling them, "Hey, you really need to use this." A lot of people just like, basically word of mouth is the way you described it.

    16. ULUri Levine1:11:58

        No, not just word of mouth. Even occasionally some- someone to show them how to use it.

    17. LRLenny Rachitsky1:12:02

        Mm-hmm. Yeah, that makes sense. Just like, "Here, check out Waves."

    18. ULUri Levine1:12:06

        That's right.

    19. LRLenny Rachitsky1:12:06

        "Here's how it works."

    20. ULUri Levine1:12:07

        Yeah.

16. 1:12:08 – 1:15:34

    Talking to the right users

    1. LRLenny Rachitsky1:12:08

       Yeah, that makes a lot of sense. Okay. Amazing. Is there anything else along those lines as you're talking to customers and understanding what you're looking for that you wanna share?

    2. ULUri Levine1:12:16

       You know, occasionally, we, we... What happen is that we speak with the wrong customers. Right? So just imagine that we have what I call funnel of use, right? So on top of the funnel, we have people that are download the app, let's say, or, or have, you know, entered our website, right? And then the next phase is that they registered, and the next phase that they're trying to use it for the first time. And then the next phase is that they're, um, getting the value and then coming back, right? In this funnel, what we usually try to do is speak with the users at the bottom of the funnels, those that were successful. But in order to improve, we need to speak with those that fail, right?... those that were unsuccessful, those that did not register, or they did register and did not use, or they did use and did not come back, because they know something that we really need to know: why. This why is what makes a great product.

    3. LRLenny Rachitsky1:13:19

       Interesting. I imagine you could also fall into danger there of people that just aren't a fit for your product. There's just no point wasting your time on people that are just not gonna be a fit. So is the idea there find people that are really far down the funnel but still balanced

    4. ULUri Levine1:13:31

       Yep. ... and churned?

    5. LRLenny Rachitsky1:13:34

       Awesome. Amazing. Okay, so we've gone through all the chapters I was hoping to go through plus the ones you were excited about. Final thing before we get to our very exciting lightning round, we have a segment on this podcast called Fail Corner, where I ask a guest to share a, a time they failed in their career and what they learned from that experience. And I'm curious if there's, is a story that comes to mind of a time that you failed, either in a startup or in your, as you were an employee somewhere, and how that was important to you.

    6. ULUri Levine1:14:05

       So, so number one, I reserve the right for my biggest failure yet to come.

    7. LRLenny Rachitsky1:14:11

       (laughs)

    8. ULUri Levine1:14:11

       Um, and, uh, um, and look, I keep on trying new things, right? I keep on doing things. And so eventually I will fail, uh, as much as, uh, um... Maybe I, maybe I'm more successful, um, statistically than, than others, but I will fail. And this is very, very important part to realize, don't be afraid to fail, right? In your journey, you're gonna fail multiple times. And when you fail and get up, you get up stronger. This is maybe something that I will, um, tell all the parents in the world. The biggest advice that I can give you is teach your children to fail, because when they get up, they get up stronger. And when they know that, they will get out of their comfort zone, and they will eventually discover what makes them happy. And at the end of the day, as parents, there is only one thing that we really like. We want our kids to be happy, in their own way. We don't know what it is. They don't know what it is. We want them to explore, and they will only explore if they are not afraid to fail.

    9. LRLenny Rachitsky1:15:18

       Yeah, this is, uh, very, uh, timely advice for me, 'cause our kid is always falling down. And it's always this balance between helping him (laughs) not fall and letting him figure things out.

    10. ULUri Levine1:15:27

        Let them fall. There is a Japanese saying, uh, "Fall seven times

17. 1:15:34 – 1:22:05

    Lightning round

    1. ULUri Levine1:15:34

       and get up eight."

    2. LRLenny Rachitsky1:15:36

       Uri, is there anything else that you wanted to share or leave listeners with before we get to our very exciting lightning round?

    3. ULUri Levine1:15:43

       Um, no, I think that was... Actually, I really enjoyed that.

    4. LRLenny Rachitsky1:15:45

       Amazing. Well, we're not done yet. We've reached our very exciting lightning round. Are you ready?

    5. ULUri Levine1:15:50

       Yep.

    6. LRLenny Rachitsky1:15:51

       All right, first question, what are two or three books that you've recommended most to other people other than your own book?

    7. ULUri Levine1:15:58

       Marc Randolph of Netflix, uh, That Will Never Work, right? And, and by the way, it's funny, Marc Randolph, uh, wrote the endorsement to my book, and, uh, I reached out to him, um, because I read someplace that, uh, um, that he's answering all of his emails. And, uh, I reached... I sent him an email and said, "Look, we have at least three things in common. Um, number one, I do answer all of my emails as well. Number two, I'm using your product, you are using mine. And number three, I heard more time that will never work than you did." And, and I think that understanding this journey is really, really important. So this is definitely a book that I will, um, I would recommend. Atomic Habits, getting habits and improving them, measuring and improving is really, really important.

    8. LRLenny Rachitsky1:16:55

       Very cool choices. Do you have a favorite recent movie or TV show that you really enjoyed?

    9. ULUri Levine1:17:02

       I don't watch a lot.

    10. LRLenny Rachitsky1:17:03

        (laughs) Easy then. Do you have a favorite product that you've recently discovered that you really love?

    11. ULUri Levine1:17:11

        So I'm, I can bet that most of the people say the ChatGPT, but, uh, but actually, no. I, um, recently downloaded a chess app, and I returned to play chess with, uh, the computer, something that I haven't done for so many years, and I really enjoyed that.

    12. LRLenny Rachitsky1:17:30

        Amazing. Uh, it's actually, I don't think ChatGPT has ever been recommended. Uh, recent choices have been a beautiful Persian rug, a, uh, Rivian, uh, a very nice Mercedes, and, uh, like, I think recently it was a course on, uh, nervous system regulation.

    13. ULUri Levine1:17:48

        Cool.

    14. LRLenny Rachitsky1:17:49

        All, all over the place. Two final questions. Do you have a favorite life motto that you find really useful in work or in life? It may be the one on your shirt, but is there, is there any other that you come back to often and find useful?

    15. ULUri Levine1:18:03

        Don't be afraid to fail. Uh, I think that in many cases, we need to accept the fact that we don't know.

    16. LRLenny Rachitsky1:18:09

        Important words. Final question, is there a problem you're starting to fall in love with more recently and maybe tinkering with a new startup idea, or are you done with starting companies?

    17. ULUri Levine1:18:21

        Um, I'm probably will never be done.

    18. LRLenny Rachitsky1:18:23

        (laughs)

    19. ULUri Levine1:18:24

        Um, I have, um, you know, 10 different startups in, in multiple areas. One of them, uh, Pontera, helps people to retire richer, uh, which is, uh, one of the biggest challenges in, in the world in general, but also in the US. Um, if I would ask 100 people on the street that have 401 (k) plans, uh, "What is your 401 (k) plan invested at?" 95% of them will tell me, "I don't know." I do know, by the way. In the default, whatever was the default when they joined, right?Now obviously, if you didn't do anything and you think it's right, uh, no, it's not right. It's probably simply not enough. Um, so this is a big problem. Um, I have one in the medical space that is trying to create, um, um, I would call that the, the AI of the medical knowledge, so trying to improve doctors, um, and in particular in clinical decisions. That is going to change the world, but if you would ask me then I will, um, give you some examples, right? So, so mobility is still a problem, right? You look at many areas in our lifetime and mobility is still, uh, every year it's, instead of getting better, it's getting lesser. So mobility is still a problem. Um, and, um, medical services, right? U.S. medical services are five to 10 times more expensive than they are in Germany. Now, it's not that they are better. They're simply more expensive, so obviously you ask yourself, "Okay, where is this inefficiency? Where is it?" Right? A lot of places of inefficiency in the medical services if they are so impo- so expensive.

    20. LRLenny Rachitsky1:20:09

        Mm.

    21. ULUri Levine1:20:10

        Um, education. Okay, anything that I will tell you that we are still doing the same way that our parents did is probably something that we need to revisit.

    22. LRLenny Rachitsky1:20:22

        I feel like a nerd sniped you with, uh, falling in love with problems, clearly you fall in love with a lot of problems you wanna solve, solve them all, you're, uh, addicted to start-ups.

    23. ULUri Levine1:20:29

        Well, you know, I think the good news is that there are a lot of problems.

    24. LRLenny Rachitsky1:20:31

        There's a lot of problems.

    25. ULUri Levine1:20:31

        And the bad news is that there are a lot of problems.

    26. LRLenny Rachitsky1:20:33

        (laughs) And you're there to solve it. I love it. Uh, Uri, your book is amazing. It's incredibly practical, full of tons of advice that every founder should read. Uh, and it goes from idea all the way to exit, so basically no matter where you are on the journey, the book is gonna be useful to you. Tell people where to find it, and where they can follow you for more stuff that you share over time, and then how can listeners be useful to you?

    27. ULUri Levine1:20:56

        So, um, obviously this is, uh, the book, uh, Amazon, Barnes & Nobles, uh, um, are basically places that you can find it. Um, you can follow me on LinkedIn, um, this is pretty much the only, um, the only network that I'm, um, actually engaged. Um, if you read the book, then you will find my emails in the book and then you can email me as well. I, um, and I do answer all of my emails. You know, I want you to read the book. I don't want you to buy the book. I want you to read the book. And the reason is that, uh, um, I have a purpose in life, and this is, um, creating value. And I believe that this book is going to be the best return on investment that you ever made. Not the $20 or $30 that it costs, but the time that, uh, you're gonna spend on reading it. And therefore, I can be valuable for you. And if I can be valuable for you, then I serve my purpose.

    28. LRLenny Rachitsky1:21:53

        Amazing. If you weren't on YouTube watching this, the book is called Fall In Love With The Problem, Not The Solution if you're trying to Google it and find it on Amazon. And, uh, Uri, thank you so much for being here.

Episode duration: 1:22:31