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My First MillionThis AI Startup Idea Has 500 Million Customers Waiting For It
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EVERY SPOKEN WORD
45 min read · 9,463 words- 0:00 – 3:00
Intro
- JCJason Cohen
I mean, how many times have, has, has someone proposed something, everyone's like, "Eh, I don't get it, blah blah blah." But then someone else is like, "Look, what this is really about is blah blah blah." And everyone's like, "Oh, that sounds great."
- SPSpeaker
Right. [laughs]
- JCJason Cohen
"That I want," what you just said, you know? It's not bad information, it's bad presentation.
- SPSpeaker
I made my whole career doing that. [laughs]
- JCJason Cohen
[laughs]
- SPSam Parr
[upbeat music] All right, Jason, we're live. This is how we start.
- SPSpeaker
[laughs]
- SPSam Parr
We, we just jump right into it. Can I give the, uh, can I give my, like, brag-about-you intro of what I know about you, and then you can kinda correct anything that I get wrong?
- JCJason Cohen
Of course.
- SPSam Parr
We have Jason Cohen. So Jason Cohen originally started... You had a bunch of smaller businesses, but in the early 2000s you started, was it called, uh, is it just called Smart Bear or Smarter Bear?
- JCJason Cohen
Just Smart Bear. That was 22 years ago, believe it or not. Smart Bear.
- SPSam Parr
So 22 years ago you started Smart Bear. You grew it for, like, seven years, bootstrapped it, making millions of dollars in profit, sold it. That company now has a thousand plus employees, has sold recently or traded recently for, like, 2 billion. Is that right?
- JCJason Cohen
Yeah. It actually doesn't have that many employees. It's more like hundreds, which is part of why it's impressive, 'cause it's... Yeah, it was sold in 2020 for 2 billion, and it doesn't have a thousand employees. It's super profitable. Like, uh, it, it was publicly said then, um, what the profits were. It's 50% bottom line profit.
- SPSam Parr
God. So just, just a, um, a printing, a cash printing machine. Then you started-
- JCJason Cohen
Yeah
- SPSam Parr
... WP Engine, of which I'm a customer of. WP Engine's one of the largest web hosting companies in the world. Uh, that company you bootstrapped for two or three years, then you, now you've raised, I think, 2 or $300 million. It makes many hundreds of millions of dollars, is worth billions of dollars. And all along the way you've been blogging at, uh, asmartbear.com. I've been reading that for years. You are not the loudest person, and that's the reason why I wanted to have you on, is 'cause you're not the loudest person. But anyone who's, like, in the thick of it and trying to build great companies, everyone reads your blog. Like, the, the, the, the 1%, the 1% read your blog. You've got a really good audience of people actually building it. And the reason I like you is you and Dharmesh are a little bit of the same personality to me. There's, like, this Venn diagram, and it's like, it's like people who are wildly successful, like we're talking billionaire successful, but then also are just do shit just because it's fun, and at the same time have this weird, like, logical way of thinking, but then can, like, disregard that logical way of thinking and just do what's cool and what's exciting, which is really rare to have someone who's both an engineer but also understands, like, "Eh, fuck it, I'm just gonna do it 'cause this is cool." And you do that. So, like, Shaan, he just DM'd me on Twitter, and I was like, "Dude, I just got this automated DM from you." He's like, "Oh yeah, I built this script that automatically DMs everyone who follows me on Twitter." So he's that type of guy where, like, he's got, like, a thousand projects that he will never even talk about, but it's, like, a little thing that he had to get on the weekend. But you also have WP Engine, which is this massive unicorn. And so that's why we wanted to have you on the podcast.
- SPSpeaker
Well, yeah. I mean, WP Engine's a, like, one of the top 10 web platforms [laughs] in the world. And then you're also tinkering with,
- 3:00 – 11:30
AI improved presentations
- SPSpeaker
like, these DM, auto DM scripts 'cause you're like, "Yeah, this is useful. I like this." And so that's the... That combo we've, we've come to find is a really good fit with us on the pod. Somebody who has ambition and scale, but also is a tinkerer at heart.
- SPSam Parr
I wanna talk to you about some different ideas. So check this out. Shaan, uh, on your computer, and Jason, if you have a computer, do this too, go to zeck.app. So it's the word deck but with a Z. So Z-E-C-K dot app. Okay? So it says, "Zeck's reimagined how CEOs collaborate with their board." You scroll down. Whose face is that?
- SPSpeaker
[laughs] Yeah. Ed, Ed, Ed Norton. [laughs]
- SPSam Parr
Ed Norton, the actor, is the founder of this company.
- SPSpeaker
That's funny.
- SPSam Parr
He's, I believe he's, like, if you Google, like, this company Zeck and you see, like, them doing presentations on CNBC and shit like that, he's talking. He's the founder of this company.
- SPSpeaker
Dude, I just booked a demo call in 45 minutes just in case it's Ed Norton who's gonna... I just might get a free call with Ed Norton. This might be great. If it's not Ed Norton, I'm immediately hanging up the Zoom. [laughs]
- SPSam Parr
I saw an interview with him, and he said that he's super active. But these guys are, they're like... I guess Ed Norton's father, I think, was a business person, and he was raised around business. And he, uh, he was... [laughs] I saw him give this interview and he was like, "Yeah, the thing about when I work with all these companies I invest in is they're horrible at telling me back the story. They're horrible at giving a presentation. And I, so I just, I wanted to create software that would just help them be better at that, at telling the story-"
- SPSpeaker
Yeah
- SPSam Parr
... explaining how the company's going, and to make our meetings more productive, and to teach them how to do a presentation.
- SPSpeaker
Yeah.
- SPSam Parr
And I think this company, I don't know if it's software yet. I think it's still a service. I'm not, I'm not en- entirely sure. Uh, but I, [laughs] I saw this site and I was like, "What the fuck is Ed Norton doing on this little-"
- SPSpeaker
[laughs] Yeah, that's funny
- SPSam Parr
... "like, software site?" But Ed Norton is, this is his company doing it.
- JCJason Cohen
And you know, it's not just the experience of the viewer and, and just wanting people's time to not be wasted, which it also is that.
- SPSpeaker
[laughs]
- JCJason Cohen
But it's also more compelling.
- SPSpeaker
Yeah.
- JCJason Cohen
Like, if you're trying to propose something, if you do a better job, more likely that it'll happen. I mean, how many times have, has, has someone proposed something, everyone's like, "Eh, I don't get it, blah blah blah." But then someone else is like, "Look, what this is really about is blah blah blah." And everyone's like, "Oh, that sounds great."
- SPSpeaker
Right. [laughs]
- JCJason Cohen
"That I want," what you just said, you know? Like, what? I mean, that's just bad presenta- it's not bad information, it's bad presentation.
- SPSpeaker
I made my whole career doing that. [laughs]
- JCJason Cohen
[laughs]
- SPSam Parr
Well, yeah. We have, like, we have these college, we have these college kids come on o- once a year, twice a year, and they, like, pitch their company. And Shaan's very good at hearing what they said. He goes, "That's actually a great idea. You're, you've explained it horribly. Here's how I would retell that." And he will tell-
- SPSpeaker
Right
- SPSam Parr
... this beautiful story, and then everyone's jaw is dropping, and we're like, "Yeah, we're in." And, uh, he does that all the time. He's very good at that.
- JCJason Cohen
You know, we've done pitch competitions as, as Capital Factory for 15 or 16 years, and it always goes like that. So can AI magically fix it all? I don't know about that. But, like, could it, could it g- go from, like, negative 10 to at least, like, a 2 out of 10? You know, [laughs] maybe.
- SPSpeaker
Well, I think you said three, uh, I, I thought of three interesting things while you were talking. I think you, you prompted three really interesting ideas. The first is you're right that most decks are terrible and they're not... A- and everybody attacks this from a how do we make the slides fancier- Prezi's like, "Hey, what if you were hang gliding while you were looking at the slide deck?" It's like, no, no, Prezi, just chill out. It's not, that's not what we need. And other people pitch as like, "You know what? What if a designer just designed everything?" It's like, cool, but the actual message is the, the part that's out of order, jumbled up and unclear, it's foggy, and that's why this deck is no good, not because the background color needs to be soft pastel pink. And so you, you start to look at this, and one thing that I've done is, uh, whenever somebody on my team makes a presentation, I inevitably will try to, like, try to make it better. And the easiest way to make it better is just to ask a couple of questions, right? Like a couple of simple questions. One is like, "If people are gonna remember one thing from this presentation, what should it be? What's, what is the number one takeaway?" "Oh, it's this thing on slide 37." "Cool. Let's make that slide one, and then that thing you want them to take away, let's make that the title." Right? Like, that, that'll be the title of that slide. And you just sort of go on, you know, you ask, like, five questions, and you can make your presentation much better with five questions. I've also started using AI in this way. So instead of going to AI and basically go to ChatGPT, instead of asking a question and getting an answer, which I think is how most people use it, I'll go to ChatGPT and I basically say, "I'm trying to do X, uh, but I'm not sure where to start. What are some questions? Like, ask me some questions so that I can start thinking about this the right way." It'd be like, well, it seemed like, you know, we did this when we, we did an episode where we were picking a... We were doing a, a fake, like, Stock-a-palooza. We were picking a stock. It's like, pick one stock. They, you know, just, like, for fun, like, we're all horrible stock pickers, but let's do it just for fun. And I went and I, I wrote that. I said, "How should I be thinking about this?" Like, well, if you're picking a stock, what you want to do is this, right? And you, you might want to ask yourself the following questions: What's an area I really know about? What's a thing that I really believe in? What, am I looking for something short-term or long-term, right? And it asked me a bunch of questions that made me get more clear. And I think if AI was gonna do anything, it w- what it wouldn't do is just take my input and make it better. It would actually sta- stop me before I even vomit, and it would just say, "Cool, let's just establish a couple of ground..." You know, how long is this supposed to be?
- JCJason Cohen
Yeah, absolutely. Getting, getting interviewed and, and getting interviewed by it makes a lot of sense, especially if it has some context of what you're saying, and so the, the questions can be even more pointed. Another thing I've heard once, which I really like, I haven't used this a lot, but it's, it's neat, which is one thing that AI is good at right now is just giving you the bland, neutral summary of the topic.
- SPSpeaker
Right.
- 11:30 – 14:00
Automated Twitter hacking
- SPSpeaker
not technical, and I'm the one who actually made it. And once it's made, I then shared it on social media, and we had thousands of people see it and thousands of people who gave us their information. And I can then see over the next handful of weeks, this is how much revenue came in from this wealth survey that I did. This is where the revenue came from. So it came from Twitter. It came from LinkedIn. Whatever it came from, I can actually go and look at it and I can say, "Oh, well that worked. That didn't work. Do more of that. Do less of that." And if you're interested in making landing pages like this, I highly suggest it. Look, I'm actually doing it, but you can check it out. Go to the link in the description of YouTube and get started. All right, now back to MFM.
- SPSam Parr
Here's what's funny is that, you know, I have no idea if you are, but you, you might be a billionaire or you're in that realm and you've started multi-billion dollar companies. We asked you about ideas. The idea that you spent most on is on how you manage Twitter.
- SPSpeaker
[laughs]
- SPSam Parr
I find that to be hilarious.
- SPSpeaker
Yes. Gi- give us the second idea. Your, your so- your Twitter, social media management tool idea.
- JCJason Cohen
Yeah. Well, it's not just Twitter. Like, part of what's neat about it is, uh, I- the same tool does LinkedIn and Threads and, uh, and, uh, Mastodon, which isn't, isn't really working, but okay. Here's some stuff I think is, is special and, and also other people could just do this even manually if you want. So one is, um, there are certain people that I, uh, that I want to have more interactions with, so I have them in a Twitter list because then you can search for it, right? But I do a search where it's the pers- people in that list, and they've posted in the last 20 minutes, which is a pretty small window. And there might be a couple other things like they have some favorites or I don't know of some, whatever. Okay. And I'll look at that and sometimes there's nothing in it, sometimes just one or two. But I'll try to, i- if it's relevant to me, then I'll respond somehow. And because it was ju- it just got posted, it's much more likely that they will respond or see it. Also, if it's a good comment, like if I spend time making it really good, then their followers who might see this over the course of the next 10 hours, they may see my comment and upvote it. I may be one of those comments near the top that ends up with a lot of likes and maybe some follows. I've seen times where I have a follow bump because of a reply to someone with a lot of other followers, right? By doing it early, I get that. So if I just scanned everybody, it, that timeframe is important. So it really focuses my attention on that. So I spend almost no time on this, and yet I have this big outsized impact of what those, what those are, whether I'm talking to that person or their replies.
- 14:00 – 18:30
Being a billionaire tinkerer
- JCJason Cohen
Um, so that's something you can just take. Like my system does that, but you can just take that. The other effect it has, which is funny, is people are like, "Dude, you're always online." Like, "I saw Dharmesh post and like bam, you were there like in two minutes." What they don't know is, yeah, but I see like one fiftieth of what Dharmesh posts. It's just whatever it happens to be [laughs] exactly what he posted, I'll see it. So you, your perception is quote unquote I'm always online. But the fact is, no, it's this trick. And so it's like a really funny trick that, that has that effect.
- SPSam Parr
Why do you care?
- JCJason Cohen
[laughs]
- SPSam Parr
Why do you care? Because you, you, you had, you had this one thing-- Well, no, I, I asked that 'cause you wrote this other thing that I totally agree with. So, uh, let me, let me say it this way. I have a bunch of buddies that are very successful. You have no idea who they are. They'll see me get popular on Twitter and they go, "Hey Sam, can you, uh, can you help me write some tweets?" And I'm like, "Dude, why? Who gives a shit? Like you, you're winning. Do, who cares about this?"
- JCJason Cohen
Yeah.
- SPSam Parr
He goes, "I don't know. It seems fun." So I, so I help him write some stuff and every once in a while it'll go viral and they get popular, whatever, and they get addicted to it. And I'm like, "Dude, don't get addicted to this. You get addicted to the thing you're already doing. That's way better."
- JCJason Cohen
Yeah, yeah.
- SPSam Parr
And you ha- you have this post or it was a sentence somewhere in one of your blog posts where you're like, uh, "I actually think that people who have audiences that then launch software products to those audiences, I think that's really dumb because they're actually-
- JCJason Cohen
Yeah, yeah
- SPSam Parr
... not gonna get that, they're not gonna get that many customers for it."
- JCJason Cohen
That's right. That doesn't work. But that's not why I'm doing it. I'm not, I'm not launching another product 'cause of social media.
- SPSam Parr
Okay. So then why do you care so-- I mean, when, when I followed you, I got an automated DM from you. You told me that you built something to do that. Why do you care about building something like this for social media?
- JCJason Cohen
It's strictly for fun. Now, what I have done for even longer than WP Engine is write. And so that is, at this point, just a part of who I am, and I get a lot of fulfillment out of it. And like you said, you're like, "Wow, there's a lot of good stuff here." Um, every time I hear that it feels good and also it's really just the craft of it. Like I like to try to get the thoughts that I have as clear as possible or as interesting as possible, but there's so much that gets triggered that way that's useful to me and fun for me too.
- SPSpeaker
And Sam sent me this blog post that you wrote that I loved, um, and I think it's called Rich vs. King, and this is great because we talk about money and we are honest about the fact that many people get into entrepreneurship 'cause they wanna make a bunch of money, and that's okay. You don't have, you don't have to prete- you don't have to like lie about that part, which is, I think is, is common unfortunately. Um, but you also built bootstrap companies that enabled a great lifestyle for you and your employees, and so I'm curious, um, can you explain for people who haven't read the Rich vs. King post, what is the premise of this post and then how it's played out for you?
- JCJason Cohen
I think the key thing that people really like out of it is this, uh, two box problem that I put near the end that was my final decision of why to sell Smart Bear. Which is let's say there's two boxes in front of you and let's say if you are wealthy, suppose, try to remember when you weren't. [laughs] In one box there's $10 million, like period. That's what's in the box. In the second box, which is opaque, there's either $20 million or nothing, and let's just say it's a 50/50 chance of which one it is. And the question is which box do you want? You have to pick just one. Which one do you want? Well, if you don't have money yet, I mean, almost everyone's gonna pick the 10 million for sure 'cause it changes your life permanently. Now you could argue, you know, what kind of lifestyle, blah, blah, blah, but like that's a life-changing amount of money. Whereas the other one is even more money, but it's actually not that much more life-changing and there's a good chance that you won't get it at all. That's silly. This is why when you get offered some money to sell the company, it's often a good idea to take it. Of course, it could be big in the future, but if you haven't crossed over to this life-changing amount of money yet, what I was in that post called the freedom line, you could argue how free, how much money. Okay. But when you cross over some sort of line which maybe you should decide for yourself, it's r- it's awfully hard not to take it. Now, the, what's interesting with the box game is if you're a statistician or you're an economist, what you would say is there's no difference between the two boxes because the expected value of both box is 10 million, so they're the same. And my point is, no, they're not. [laughs] Expected value is not the right way to evaluate the situation. Furthermore, in real life, I said that one box was 50/50. In real life, you don't know what the probabilities are. What's the chance the company will grow and sell and be huge? What's the chance it's stagnant and it doesn't sell? What's the chance that it goes to zero? Like, nobody knows. So it's worse than that. It's uncertainty, meaning I don't even know what the probabilities are, much less risky, which
- 18:30 – 23:30
Rich vs. King
- JCJason Cohen
means I do know what the probabilities are. So it's actually far worse. So I know, you know, yeah, some people might take the other box. It's okay. You can do whatever you want, obviously. But most people will take that sure thing when it's real money. Now, if it's $10 versus $20, you know, whatever, you might as well take a flyer on 20 'cause who cares? So the magnitudes relative to your net worth also matter, which I didn't really talk about there c- in that post 'cause I wasn't getting into that, but that's also true. It, it, is it changing something substantially for you or not is actually a critical question.
- SPSam Parr
So you're a great writer, and there's two or three great sentences that I like out of this post. It was, uh, [laughs] you very bluntly, you say, "I was always in it for the money, especially in the form of an acquisition. I would tell everyone here, 'We're here to make money, and if someone offers to buy the company someday, I'm gonna sell it.'" And then you said, after you sold it, you go, "I have the freedom to work on any project I want for the rest of my life while simultaneously providing for my family, never again worrying about bills, debt, having a place to sleep, or sending my daughter to any college she wants." And I, particularly the I was always in it for the money, I think that's just great to just be very clear in knowing exactly what you want, uh, in that post. I thought that, I thought that-
- JCJason Cohen
Yeah
- SPSam Parr
... was beautiful how you said that.
- JCJason Cohen
Also, it's not incompatible with things like I want our customers to be happy. I want our employees to also make that much money, blah, blah, blah. Like, it's not incompatible with other positive things that you wanna do. There's a big difference between I wanna make money and do ethical things and create products that actually have value and are not just, uh, middlemen or something like that or arbitrage. Um, you can say both. In fact, you probably should.
- SPSam Parr
So you wrote that post in '09, I think, originally, and you have this cool graph where you show, like, there's, like, a threshold of that matters. Uh, in 2023, '24, what's that threshold, do you think, now, and what do you think it was then?
- JCJason Cohen
Well, what's interesting is, um, I, it's, this is not relative. So at this point, at, at, at WP Engine, also we've had a few secondary rounds, which by the way, all employees got to participate, uh, in as well. Um, and so now I have enough money that, uh, I don't have a line anymore. Like, it's okay if I don't make any more money ever again. I really don't care. You know, uh, I, I don't care, like, oh, can I get a, a jet or not is not interesting to me. Just this is personal, right? Everyone's different when it comes to money or what they want in lifestyle. I have the lifestyle that I want. I don't need more money. So there's no line. Like, I just don't, that, that's not what's motivating or what will make a decision for me anymore.
- SPSam Parr
Well, what about Jason Cohen in '06 when you sold? Like, was there, what was the number where you were like, "Anything above is gravy-
- JCJason Cohen
Oh
- SPSam Parr
... and that's, that's a threshold for me"?
- JCJason Cohen
I think then I was thinking t- uh, like 10 million. Um, I think, I think nowadays it's, it's much more clear that you need something like 20 million. This is all in the US, by the way, to have what would be considered to be, like, a rich lifestyle in America. 'Cause, okay, you know, people say things like, um, "Well, I only spend, you know, 80 to 100K a year right now, so if I had 10 million, I, I could live off of that," and you'd be right. But that's not how people are. I mean, I'm not very materialistic, and even I wouldn't wanna do that. "Oh, I'm gonna continue to live at that rate forever" isn't usually what people wanna do. It could be. Again, if that's you, then that's, that's amazing. That's awesome. Perfect. You know what to do. That's not really what happens. So probably more like 20 million 'cause you have to, you have to y- there's a lot of things to do. But you have to think about, um, averages and having a portfolio that's balanced and then taxes and then inflation. And so even 4% of, of interest taking out per year is actually kind of a lot given that you wanna maintain it and keep up with inflation, et cetera. And that's where the 20 million sometimes comes from is, is, uh, you know, 4% of that is, like, a little under a mil- a million after tax, and then you can have quite the, what you, what anyone in America would consider a rich lifestyle.
- SPSam Parr
I'm happy that you put a number on it.
- SPSpeaker
One thing that I think is cool, uh, we should put this chart up our, the graph on, on our YouTube channel. So basically it's like [laughs] there's, like, the levels. He's like, "You can't afford to lose your job." You know, at, at some point you're at that level where it, losing your job would be detrimental to you. Okay, then you can own your own house. Then you can, and he wrote, "Never look at the right side of a menu," right? [laughs] So you only look at the dish, you don't look at the price. Uh, never have to work again, and then it's, like, private jet. And you can see that, like, it's asymptotic. The, the, the value of the cash is, you know, definitely flattening out the further you go. And so you draw that line-
- JCJason Cohen
Yeah
- SPSpeaker
... and the, the freedom line basically of, like, you never have to work again. You could have total, total control over your time as, like, the important threshold.
- JCJason Cohen
Yeah, but see, so much also depends on things like, I mean, if you're 26 and you get this offer, um, and you know you do wanna work, like, you don't wanna not work again. That's not what you're gonna do. You're gonna do something. So it's like, all right, I don't need to never work again, quote-unquote. What I would like to m- but, but let's say you're burned out. It's been six or seven years. You just wanna do something else. And so, well, uh, you know, you do take a ton of money off the table. Then you can invest a couple million into your next venture while still keeping a couple million in the bank. And so no, you couldn't live off that for the rest of your life, but you don't wanna live off that for the [laughs] rest of your life. You want enough to self-fund something and do the next
- 23:30 – 31:30
All startups are screwed up--including the ones that work
- JCJason Cohen
thing, and so, I mean, you have to look at the goals of course that are in front of you. Um, but certainly you don't wanna adopt other people's goals. I mean, I think that's maybe the unspoken other message of the post is what is it that you want, and how do you know that? And how do you get that? And if someone else says like, "No, you should, you should build a unicorn." Like, it doesn't matter what anybody else says. [laughs]
- SPSpeaker
Yeah. Play your game. So, uh, you know, your blog is basically like a, a goldmine of startup wisdom, and I was mining it last night when I was doing my research for this, going back through, reading some of the stuff that I liked. And there was a few things I had never read that I actually really, really liked. I wanted to read a couple of these, get you to react to them because you had some-
- JCJason Cohen
Okay
- SPSpeaker
... uh, like kind of just nuggets. Small, small short things that I want you to elaborate a little bit on or maybe give an example about just to make it real for people. Um- Because they f- they rang true to me. So here's one. You said, "All startups are screwed up, including the ones that work. It's just that the ones that work have one or two things that they're excellent at, even though they screwed up a bunch of things that didn't, th- uh, it didn't kill them. They didn't die." Um, so explain this, 'cause I think people have a perception of, "My business is kind of screwed up. That's maybe why I'm failing. The ones that work, it's all working. It's all good. It's, you know, that, it's something different."
- JCJason Cohen
That's right.
- SPSpeaker
Explain that one.
- JCJason Cohen
Yeah. It makes sense that that's our perception, number one, 'cause we all have, like, some form of imposter syndrome of, like, somehow everyone else has their shit figured out and we don't. Um, which of course isn't true, but it makes sense that we all kind of feel that way. Um, the other thing is we see every problem in our business and we only dwell on the problems. Like, the things that are going well, we're not spending time on those things, 'cause that's not what needs attention and needs fixing. So, you know, we're spending 90% of our time on all the problems, of which there are many. So we feel like we're just drowning in, in bad things, which we are. That's the truth. Then you look at a competitor or whatever, somebody on TechCrunch, and what are you seeing? Some weird varnished outside not true version of it where they're super confident and everything's fine, blah, blah, blah. The w- the way I like to say it is, um, whenever you see a company k- kind of like immediately go out of business, go look at what they posted on their blog the previous week and go look at the last podcast they did. I promise you it was 100% optimism, everything's going well, we're growing like crazy, we're getting profitable, we're hiring, people are loving. I guarantee it's all that the week before they went bankrupt. That just proves that it's bullshit. Now, that doesn't mean everyone's failing or everyone's not failing. It just proves that what you're seeing is definitely not the truth. But you are seeing your truth and dwelling on the bad. So this disparity makes sense, but once you ... So, so it's logical. But once you know that, you're like, "Okay, so it's not like every- it's not true that everyone's public persona is, is the truth." Then the other thing you can do is read the more honest accounts of businesses like Twitter or, you know, Facebook, all this stuff when they were coming up and it's just full of shit. [laughs] Like, it's just full of stuff all the time. But what do you see in those things? Not that you should be like Facebook, I'm not saying that, but just as an interesting factor. But what is it about 'em? It's like, well, here's this thing. There was something about connecting people at, on colleges with the faces and the whatever that was just so correct, so good, what we might say now had such good product market fit, that despite all of the other problems it was a raging success. Uh, at Twitter, like this idea that you're posting just the headline of your blog post. Why was that so perfect? I don't know. Maybe no one does. People have theories. It doesn't matter. Point is, it was so compelling that all those other problems just ... I mean, there was a fail whale for years. For years they couldn't keep the site up. Something about it, again, I, maybe I can't put my finger on it, but something about it was so compelling they just se- they succeeded despite this obvious public massive year, multi-year failures [laughs] you know? So that's what I mean by like, okay, so everything's screwed up. Okay, different ways, different levels screwed up, sure, but everything's screwed up, and if there's those one or two th- things that are just so compelling, whether it's delighting people or so useful or it's built into their workflow, there's various reasons why something might be just so good, and I have thoughts on that as well of course, um, then, uh, then it, it, you succeed despite those problems. So it doesn't mean those problems are like okay and you shouldn't attack them, but it does mean a few things that are very useful. One, emotionally. Like, get over it. It's okay. Everyone else is screwed too. Two, you're not gonna fix everything and you don't have to because success stories besides like Facebook, blah, blah, blah, but even bootstrap solo companies, that person also does not fix every problem they have. Of course, how could they? There's just not enough hours in the day. So you don't have to fix every problem. Ooh, that's a relief. Then that begs the question, which couple of problems only should I be fixing right now that really are holding me back, that really might lead me to go out of business, that really is hindering my growth the mo- the most? That's really why people are canceling the most. You know, these, these are example things that might be that critical problem or two. Identifying that by answering questions like those, that's what you should do and you should be seeking what that one or two, you know, critical things are that's the reason people don't cancel despite that crap, the reason people sign up despite, the reason they advocate for you on Twitter or review sites. What are they saying in there that's so freaking good? 'Cause whatever that is, you need every, every customer to experience that thing. Like, maybe you can change your processes or your so- your features or the onboarding process, whatever, so that more people experience that amazing thing, whatever it is. So identifying those one to three key things, the one to three problems, that's what you gotta do. Then that's where you focus your time, whether you're a solopreneur or whether you're WP Engine and you have, uh, 1,200 people. Those are the few things you focus on, on. You know, how do I remove some of those barriers that I actually should? How do I enhance these things that are the thing that's making it work? And the, all the rest of it you don't wanna ignore. You wanna do it. You see it. But you must just for capacity and actually it's okay that you are and, and again I gave you lots of examples of why it is okay in fact that you are. So that's what to do about that.
- SPSam Parr
Dude, I remember I used to host these events and I would ha- I would get to, we'd have all these speakers come and they were founders of every startup you've heard of and I would hang out with them in the green room with about six of them at a time and it was nothing but complaining and fear. And I remember we had this guy named Alex. Alex started this company called The Athletic. If you guys know The Athletic it's like a, um, subscription sports blog or media company. They end- eventually sold to New York Times for hundreds of millions of dollars. I was with him I think on a Friday and that Wednesday, the Wednesday before, they just released an article saying they had raised $100 million in funding, everything was going great, right? And they had this beautiful photo shoot and he was a ball of stress and I think he w- he was just kind of, um, venting a little bit to me of saying everything that was going wrong, how he's so frustrated with this and that and I remember thinking like Dude, you're in The New York Times, like, on Wednesday, and you had this beautiful photo shoot. Like, sounds like everything was going re- great. And he was just, it was just... The reality was that things were going mostly great. Obviously, he turned out all right. But he was just complaining so much to me because I was just kind of a sounding board for him. And I remember, like, thinking after all of these events that I've hosted, that was my major takeaway, which is that the people I admire, they were shit shows just like I was. And that was, like, kind of a game-changing, kind of mind-altering belief that, that happened doing those events.
- SPSpeaker
You're like, "I gotta be careful. No, I gotta be careful asking 'How's it going?'" [laughs] You never, you never know what you, what answer you're gonna get.
- SPSam Parr
Yeah.
- JCJason Cohen
Yeah. Yeah, don't ask. [laughs] Yeah.
- SPSam Parr
Yeah.
- JCJason Cohen
Yeah.
- SPSam Parr
Yeah. I was like, "How are you, man?" And he was like just bitching-
- JCJason Cohen
[laughs]
- SPSam Parr
... con- constantly. And, and, and I also, like, I, like, egg, egg, I gotta give these guys respect. I was egging them on. It's not like they were just-
- JCJason Cohen
Yeah
- SPSam Parr
... like bitching to bitch.
- JCJason Cohen
I will-
- SPSam Parr
I was egging them on
- JCJason Cohen
... I will say something does change with scale. So, um, before product market fit, it's obviously you don't know what you're doing yet. That's the whole point. And then you do, and you're starting to scale up if you do. Um, then it's just all a shit show, all of it, because everything's growing and weird and no one knows what to do. And, and the things that got you to product market fit are the wrong actions
- 31:30 – 33:30
Be so good you can't fail
- JCJason Cohen
to take when you scale. You're like, "All I'm doing is experimenting." Not when you scale. You know what to do now. You need to do more of it. You need specialists in it. You... So it's a totally different behavior. It becomes more like a, a, like a tumultuous, uh, ocean kind of thing, where it's like some things are riding high and, and fine and, and some things are not. But it's not true that, like, 100% of the things are broken. It's just not true anymore 'cause we've had the time and the people and pr- and blah, blah, blah to build up that. And you need to. Like, as you scale up, you need, it needs to not be a food fight forever. Like, it has to mature into something 'cause you can't, you can't operate like you were just saying with 1,000 people. That's just complete chaos. So that's, that can't be.
- SPSpeaker
Y- you had a good quote from, uh, the guy from Box, Aaron Levie. He, he said, um, [laughs] he goes, "Starting up is the act of doing as many jobs as possible to make sure your company doesn't die. And then scaling up is the act of shedding as many jobs as possible to make sure that your company doesn't die," [laughs] to make sure it survives, right?
- JCJason Cohen
Yep.
- SPSpeaker
I think that's, uh, very true.
- JCJason Cohen
You know, another thing that Aaron Levie specifically said is, uh, um, "At any given time, half of the company isn't working. I just don't know which half."
- SPSpeaker
Right.
- SPSam Parr
Dude, Aaron Levie doesn't get nearly enough, uh, clout, I think, uh, as he should. So for those listening, Aaron Levie started Box. It's box.com. He started Box, which is a... It's, like, very similar to Dropbox, but enterprise. He started that company when he was, like, 18 or, uh, was it 18? Was he that young? Like, he was just out of high school, I think, and he's, and it's now a publicly traded company, and he's still the CEO. He's been doing this now for 15-plus years maybe. That guy does not get nearly enough credit. That guy's the man. We should have that guy on.
- SPSpeaker
Yeah. Aaron, you're welcome on. Uh, I have a few, few other spicy takes I wanna get your, get your reaction to 'cause I was, like, reading this. I was like, "Oh-
- JCJason Cohen
Yeah
- SPSpeaker
... I've been guilty of that." 'Cause a lot of your advice, even though WP Engine's this huge company and you could talk about, like, scaling this big thing, a lot of the stuff that resonated with me was the early stuff. Like, the, "I don't have product market fit just pulling me yet." Um, you said one thing. [laughs] You go, "Most founders who are doing customer discovery," or, like, that early
- 33:30 – 36:30
Consumers don't value their time
- SPSpeaker
stage of research about an idea, you go, "It's just a founder who's in love with their idea, essentially doing, like, fake sales calls, [laughs] like, just looking for evidence to support their belief." Um, I've definitely done that.
- JCJason Cohen
Yeah.
- SPSpeaker
I'm sure Sam-
- JCJason Cohen
We all have. That's why it rings true 'cause of course we all have done that. [laughs]
- SPSam Parr
Yeah, and you ask, like, the stupidest question ever, which is like, "Does this interest you?"
- SPSpeaker
Right.
- SPSam Parr
"Will you, would you buy this?" You know what I mean?
- SPSpeaker
Pretty good, right?
- SPSam Parr
Like, why is that dumb question?
- JCJason Cohen
Useless, useless question.
- SPSpeaker
Right. [laughs]
- SPSam Parr
Yeah. Yeah. You're into this, aren't you?
- JCJason Cohen
[laughs]
- SPSam Parr
Yeah. You just ask these-
- JCJason Cohen
Yeah
- SPSam Parr
... like, leading dumb questions.
- SPSpeaker
You have another one that I think is pretty good. You go, "Sell more value, not more time. Customers don't value their time. They do crazy things to save $2. Don't sell them time-
- JCJason Cohen
Yeah
- SPSpeaker
... because they don't even value it. Um, sell them more, more value."
- JCJason Cohen
Yeah, that's especially true in consumer. Consumers really don't value their time. Um, but even in business that's true. And so, like, a classic example is, uh, if you, you, you could have a product, let's say, that, um, makes it less expensive to get marketing leads. And so you could say, "This halves your cost," 'cause it does. But what are they gonna do with the money? They might just save it. It's possible. What they could do is buy more leads. So it also could, you could say the same thing as, "Double your leads." So it's the same thing, half your cost or double your leads. Same product. But how much will they pay for halving the cost? I will pay some percentage of the cost that I saved. 25%? That's actually kinda high. Usually people won't pay quite that much. They should. They should pay up to 80%, you know? 'Cause why not? But that's not really how people think about it. Um, so you could, you could maybe, uh, charge 25% of the cost you save. But if you say double the leads, what will they pay? Well, what were they paying now for leads? A lot. What will they pay to double the leads? The same amount. They'll pay 100% more to double the leads 'cause they are already willing to pay that for leads. They're, as demonstrated by they're doing it right now. [laughs] So it's the difference between 25% of one half of your spend, which is an eighth, or 100% of their spend. Same product. So it's just an... Now, now yes, that's idealized and so forth, but it just goes to show saving money, saving time, it's not a bad proposition. But often the same product can be shown to generate value instead of saving time, and all of a sudden it's literally an order of magnitude more valuable. Now, you could take all of that in price, but, uh, as a, a, a quote that I took from Michael Mauboussin, who's amazing, um, in finance, but startup folks haven't heard of him. Um, he has this great thing about this, which is the thing to do, uh, I'm paraphrasing, but the thing to do is to generate customer- as much value as you can for the customer and then decide how to split it with them. So you could split it with them by charging more. You could split it with them by higher retention. They just love you and they stay. They're getting so much value. Or getting new customers or advocacy. They love you so much they talk. Like, these are all ways you get value. Harder to measure than price, I grant you that, but they're, they're very real. [laughs] It's very real in terms of their healthier business and the risk and the growth. Like, very real
- 36:30 – 38:00
Will WP Engine go public?
- JCJason Cohen
in all those things. So, um- Of course, that's a, that's a something of a subjective statement, I, I get that. But nevertheless, it's, it's really useful to think first generate a lot of value, then think now how do I split that with the customer, whether that's some price, some not. And if so, what, how... Even i- if it is price, how am I positioning that with them, as in more value versus less, you know, saving money or less cost or less time, something like that.
- SPSam Parr
The only way that this story, not ends, but, uh, the exit, you guys have to take this public, right?
- JCJason Cohen
There's a, there's a variety of things you can do when you're our size. One is going public. One is the, uh, another PE firm. Another one is getting purchased by a sufficiently large company, either directly or due to another, uh, um, investment, which again could either be a private thing like PE or it could be on the, they, they might be on the public markets and, and therefore have a stock sale or something like that.
- SPSam Parr
You would, you wouldn't want that though, right?
- JCJason Cohen
So the, the way I think, uh, you, you should build a good company is you want optionality, the ability to sell and at good terms, but not, not have to. The ability to raise more money at good terms, but not have to, right? The ability to go public, but not have to. Like, optionality is power. So how do you do that? You build a good company in the usual ways, a company that's growing and is profitable and the employees are happy as evidenced as by they stay, and customers are happy as evidenced by they stay. [laughs] You know, like these very obvious things of like what's a good company. You do that and that maximizes your options 'cause you ha- 'cause it's good and therefore you can drive C. That's what I've said all along and still believe this
- 38:00 – 40:51
Lessons from Silver Lake Capital elites
- JCJason Cohen
very day that's the right thing for us to do is that.
- SPSam Parr
Can I ask you one quick question as we wrap up? We talked about, um, TKO. Shaan and I both love him, but this was the... We were talking about stocks. He, he picked y- the company that owns UFC and WWE. Uh, TKO is, uh, I don't know, majority, m- minority-owned or w- you know, one of the brainchilds behind TKO is, uh, Silver Lake Partners.
- JCJason Cohen
Right.
- SPSam Parr
And their CEO, I think his name is, uh, Egon Durban. Is that how you say his name? Um, I was looking him up the other day, real fascinating guy. Does he sit on your board? I- is that right? Did I see that?
- JCJason Cohen
No. The, no, no, there's, there's, um... We have several people from Silver Lake on the board, um, really impressive, interesting people who have really helped the company.
- SPSam Parr
Yeah, what are those guys like?
- JCJason Cohen
On the finance side, um, it's just this level above what you'd ever see otherwise, right? Because in finance you either go to Wall Street to make a lot of money or you could do PE, but like this is the cream of the crop. Like, they have, you know, the, you know, um, valedictorian from Wharton doing like spreadsheets, right? [laughs] Like so, and that, and then it goes up from there. So it's just like this amazing, uh, uh, analysis and insight to things. Plus, of course, they see a lot of different companies, so they can bring a lot of like, "This is happening to a lot of our companies now," that sort of thing. Another thing I will say that's special is you, you think PE and you think, okay, well, they just take the companies apart and don't care. And of course there are those kinds of PE that e- that absolutely exist, so that, that reputation is earned. With Silver Lake though, that's not the case and that's not the reputation they have. So when you have a, a, an investor who on the one hand, sure they can, they can do all the cutthroat stuff, um, they're capable of all of it, but also they have that sort of a view on what is product, what is success, how do you build value. That's incredible. So, so Silver Lake has been really amazing, but obviously it, it, there are two things. One is a lot of firms aren't like that. The other thing is it depends on the person. If a different set of people on the board, we'd have a different experience, and that's true of all investors everywhere. So, uh, a lot of times people are like, "Should I in, should I raise money from X?" Where X is some venture firm. And the answer's always who at X? 'Cause the firm is, is... There is something 'cause there's a culture and there's an attitude. It's not nothing. It's not nothing. But the number one thing is who at the firm? That's what makes all the difference, and unfortunately that can change.
- SPSam Parr
Well, we appreciate you doing this, man. Jason Cohen, asmartbear on Twitter, asmartbear, uh, on asmartbear.com, your blog. It's the best, man.
- JCJason Cohen
Yeah.
- SPSam Parr
You're the man. We appreciate this.
- JCJason Cohen
This was fun.
- SPSam Parr
That's the pod. [upbeat music]
Episode duration: 40:51
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Transcript of episode v_9u3c38lI4
