The Secrets To Setting Smarter Goals

1. 0:00 – 0:17

   Intro

   1. MSMichael Seibel0:00

      Did you learn calculus and then get the A?

   2. DCDalton Caldwell0:03

      [laughs]

   3. MSMichael Seibel0:03

      Or did you cheat and get the A? Like, it's like you know the answer to that question. [laughs]

   4. DCDalton Caldwell0:07

      Yeah, you're right.

   5. MSMichael Seibel0:08

      Like, the A isn't the goal. It's the representation of your knowledge and your mastery. [laughs] [upbeat music]

2. 0:17 – 1:18

   Setting Goals: The Stupid Games

   1. MSMichael Seibel0:18

      This is Michael Seibel with Dalton Caldwell. Today, we're gonna talk about setting goals, more specifically, all of the pitfalls involved in setting or trying to accomplish goals that startup founders we work with tend to fall for. Dalton, why don't you set this one up?

   2. DCDalton Caldwell0:33

      Yeah. You know, when we were talking about it this morning, the, the phrase or the meme that came to mind was the one, uh, "Play stupid games, win stupid prizes." [laughs]

   3. MSMichael Seibel0:43

      [laughs]

   4. DCDalton Caldwell0:43

      You know, and again, what I think it means in this context is if, if you set goals or if you start playing one specific game that is silly to begin with or that ha- that's, like, clearly a bad call, um, yeah, the prizes, the implications of that, the things that you win are going to be equally silly or nonsensical or non-productive, okay? And so we see a lot of people who set goals to f- in effect, play, play kinda stupid games.

   5. MSMichael Seibel1:11

      Let's talk about the stupid games, and then we'll, we'll talk about the stupid prizes at the end. Those are, those are maybe even more fun.

3. 1:18 – 3:35

   What's a Too Aggressive Goal?

   1. MSMichael Seibel1:18

      So, uh, you know, I think it's, it makes sense to split this up into mistakes that people make setting goals and then mistakes people make trying to accomplish these goals. So I would say, like, the first one, um, and, and maybe I'll start with the simplest, is when people set goals that are so aggressive they aren't motivational, and, and they're basically missing the understanding of what the purpose of setting a goal is, right? Like, you want to motivate yourself to act smarter, faster, more intelligently than you would otherwise. And oftentimes, people are setting goals that are too aggressive, um, because they're motivated by fear. You know, in YC, we see this all the time.

   2. DCDalton Caldwell2:00

      And what's an example of a too aggressive goal? Like, what do you think? I, I can give you an example, but what do you think?

   3. MSMichael Seibel2:05

      Yeah. You know, I'll see a YC founder who comes into YC just starting to build their product, and they tell me, "By Demo Day, we wanna have, you know, 30K in MRR. And we wanna do that because some alum told us that, like, that's how much MRR you need in order to raise money on Demo Day." And it's just like z- how many errors can be said in three sentences, you know? [laughs] Is my, is my thought. W- what's an example that comes to your mind?

   4. DCDalton Caldwell2:32

      My most common example is someone that believes once they launch a product, it will immediately succeed and take off. And so it's like, "We're gonna spend three months building this app. We're gonna put it in the app store. We're gonna launch, and then we're gonna get, uh, 100,000 DAU."

   5. MSMichael Seibel2:50

      Yeah. Yeah.

   6. DCDalton Caldwell2:50

      And it's-

   7. MSMichael Seibel2:51

      Yes. Yeah. Like two weeks later

   8. DCDalton Caldwell2:52

      ... and it's always-

   9. MSMichael Seibel2:52

      [laughs]

   10. DCDalton Caldwell2:53

       Yeah. It's always the plan is they're gonna put it out, and then it's gonna immediately take off. Those are always the goals that, um, that are rough. And what's funny is we're always like, "Why don't you launch sooner so you have more time to make it grow after it launches?" And like, "No, no, no, no. We're gonna spend all the time making it good."

   11. MSMichael Seibel3:11

       Of course.

   12. DCDalton Caldwell3:11

       And so then when it goes, it's gonna immediately take off, top the app stores-

   13. MSMichael Seibel3:14

       Of course

   14. DCDalton Caldwell3:14

       ... 100%. Um-

   15. MSMichael Seibel3:15

       Dalton, why would we launch something bad? Then it won't take off.

   16. DCDalton Caldwell3:18

       Yeah.

   17. MSMichael Seibel3:18

       Dalton. Jesus.

   18. DCDalton Caldwell3:19

       Yeah. We, we, we... We're gonna talk to some influencers. You know, we're gonna do a social media launch. We've got it all lined up. We have a wait list. So yeah, top of the charts, definitely.

   19. MSMichael Seibel3:29

       Game on. So, um, both examples of being too aggressive. Um,

4. 3:35 – 5:43

   What are the Fake Metrics?

   1. MSMichael Seibel3:35

      the next one that comes up a lot is, uh, fake metrics. Um, and, and we've talked about this a little bit, but, you know, for companies who charge their customers money, somehow creating a goal incremented in something that's not money. Um, "Hey, my product costs $10 a month, but I'm measuring registered users. I wanna hit, you know, 1,000 registered users." And it's like, that's weird. Like, hell, if, if users is gonna be the metric, like, why wouldn't it be active users, right? Like, just, like, if we're gonna be in that world.

   2. DCDalton Caldwell4:09

      Well, that's too hard, Michael. That's why.

   3. MSMichael Seibel4:11

      [laughs] Well, fair. But if we're charging them, wh- why wouldn't it be the amount of money we make? [laughs] Like, that seems even simpler. Um, but I think you've seen a, a, a wide variety of fake metrics-

   4. DCDalton Caldwell4:22

      Oh, yeah

   5. MSMichael Seibel4:22

      ... that goes way further than users, right?

   6. DCDalton Caldwell4:24

      Yeah. It's... Uh, uh, okay, counting hits on your website, that's an oldie but a goodie.

   7. MSMichael Seibel4:29

      Yeah, yeah.

   8. DCDalton Caldwell4:29

      Um-

   9. MSMichael Seibel4:30

      Yes

   10. DCDalton Caldwell4:30

       ... counting downloads but not registrations is a good one.

   11. MSMichael Seibel4:33

       Yeah. Yeah.

   12. DCDalton Caldwell4:34

       Um, counting users as people that started the registration process and didn't finish it.

   13. MSMichael Seibel4:42

       [laughs]

   14. DCDalton Caldwell4:43

       Counting users as people that downloaded your product, opened it, closed it after five seconds, and never opened it again as users.

   15. MSMichael Seibel4:49

       [laughs] Yes.

   16. DCDalton Caldwell4:50

       [laughs]

   17. MSMichael Seibel4:52

       Yes.

   18. DCDalton Caldwell4:53

       Uh, we've heard that one. Um, just basically, like, 1,001 different ways to avoid the actual, um, [sighs] meaning of the metric, which is to capture if it's working or not.

   19. MSMichael Seibel5:07

       [laughs] Yeah.

   20. DCDalton Caldwell5:08

       You know? It's like every, every which way, people are so creative at finding ways to, like, not actually measure the thing that they know they're supposed to be measuring. And I can never tell if they're doing it to fool themselves or to fool, like, investors or authority. You know what I'm saying? Like, it's hard for me to tell when someone is practicing self-deception, that, like, number of downloads is the right metric or if they think that no one else realizes that that's obviously... Like, no one can tell what they're trying to do. We can tell.

   21. MSMichael Seibel5:37

       And honestly, it's probably both, right? It, it's probably a combination of both, right? Like,

5. 5:43 – 8:03

   Stupid Comparatives

   1. MSMichael Seibel5:43

      um, okay, so here's another one that I see a lot, especially with fundraising. Stupid comparatives. So, like, um, in 2021, Tiger gave this company $100 million funding when they accomplished blank, 500,000 of ARR. Therefore We will be able to raise $100 million of funding when we accomplish 500,000 ARR. [laughs] Right, Michael? Right? Like, there's no difference between-

   2. DCDalton Caldwell6:11

      Yeah

   3. MSMichael Seibel6:11

      ... you know, summer 2022 and summer 2021 [laughs] at all.

   4. DCDalton Caldwell6:16

      Well, and that's how it works, right? As investors, what they do is they just, um, are always consistent-

   5. MSMichael Seibel6:21

      [laughs]

   6. DCDalton Caldwell6:22

      ... and they always make the same decisions.

   7. MSMichael Seibel6:23

      [laughs]

   8. DCDalton Caldwell6:24

      And it's easy for you to tell, reading the TechCrunch announcement, why the investor made the investment.

   9. MSMichael Seibel6:29

      [laughs] Yeah.

   10. DCDalton Caldwell6:30

       Right? We- it's clear.

   11. MSMichael Seibel6:31

       Yeah.

   12. DCDalton Caldwell6:31

       Like, I read the article, um, you know, this VC invested in this company, we're kind of like that company in some superficial ways.

   13. MSMichael Seibel6:41

       Boom.

   14. DCDalton Caldwell6:41

       It's in the bag. We got it.

   15. MSMichael Seibel6:43

       And then the other one that I love about it is like, no, Michael, like, that round was announced last week. That just happened. And it's like, sorry, but [laughs] lots of things are announced way after they happen [laughs] if you... W- way, way after.

   16. DCDalton Caldwell7:00

       And so again, what, I think what we're saying about what's the stupid goal in this case, playing the stupid game here is trying to create superficial resemblance to other things-

   17. MSMichael Seibel7:10

       Yes

   18. DCDalton Caldwell7:11

       ... as opposed to deep, the thing is working, or maybe there's a deeper analog to the other thing. But if you're just focusing on the very surface level stuff, yeah, you're, that is not a smart game to be playing.

   19. MSMichael Seibel7:27

       One other example, maybe an old one we talked about in the past, you know, with Facebook, where you might be able to argue, well, they raised money when they only had a small number of users, right? And then you completely punt on the fact that, like, that small number of users were 95% two-hour-a-day Facebook users. [laughs]

   20. DCDalton Caldwell7:47

       Yes.

   21. MSMichael Seibel7:47

       So it's like the engagement was, like, incredible. [laughs]

   22. DCDalton Caldwell7:51

       Yeah. No, if you can replicate Facebook's engagement, then you've got something, versus replicating, I don't know, it's for college kids or I, I don't know. People have very superficial, um, stuff there.

6. 8:03 – 9:39

   What is Sandbagging?

   1. MSMichael Seibel8:03

      Oh, God. So y- you brought up one, um, on our list about sandbagging. Let- let's talk about sandbagging a little bit.

   2. DCDalton Caldwell8:09

      Yeah. So sandbagging, I don't know how much people are used to, to that term. Um, I think it's, I think I... It's a golf term? But sandbagging is basically where you set goals that are intentionally way easy to hit with the goal of blowing them out of the water, right? So say you know you can accomplish something in one week, the sandbagged version of the goal is to give yourself a month. And then when you go around and you hit the goal, you, like, look like a genius. And what's funny is when you are working for the man, when you are working at a company, like office space, you know, you're in a cube farm somewhere, [laughs] um, it makes sense to sandbag goals, and that's actually great career advice, I suppose, is that you, you know, you set really... You convince people that something's really hard to do, and then you-

   3. MSMichael Seibel8:59

      Yeah

   4. DCDalton Caldwell8:59

      ... exceed their expectations. What a great way to get promoted or whatever.

   5. MSMichael Seibel9:03

      Of course.

   6. DCDalton Caldwell9:03

      However, there's a problem. If you're used to doing that, and that's how you think all things should work, when you start working for yourself, when you are your own boss, you are screwing yourself. And what may be a good strategy to, like, rest invest working at Google or Facebook, and to just do as little work as possible by sandbagging goals and working three hours a week or whatever people do, when you're the boss, do you see how that's, like, not great? [laughs]

   7. MSMichael Seibel9:31

      Well, and you better believe that big company you work for didn't have that culture when it was starting. [laughs]

   8. DCDalton Caldwell9:36

      Yeah, the founders of that company were not doing that.

7. 9:39 – 11:25

   Why People Screw Up Accomplishing Goals

   1. MSMichael Seibel9:39

      No. All right. Let's talk about accomplishing goals. So okay, let's say I set a good goal, right? I, I'm a post-launch B2B SaaS company with a couple users, and I am setting a goal of getting my first 10, 10 paying users, right? Great. Like, we're in the right ballpark. Let's hear about how people screw up accomplishing goals and somehow kind of still play the stupid game.

   2. DCDalton Caldwell10:04

      Right out of the gate, it's the way that you accomplished it is something that you know in your heart is not, like... How, what's the word I wanna use? Kosher? I don't know. What, what would you, what word would you use there, Michael? Like-

   3. MSMichael Seibel10:17

      [laughs]

   4. DCDalton Caldwell10:18

      Um.

   5. MSMichael Seibel10:19

      I like using the word cheating. Like, you know, it's like you're taking a calculus test. Did you learn calculus and then get the A?

   6. DCDalton Caldwell10:29

      [laughs]

   7. MSMichael Seibel10:29

      Or did you cheat and get the A? Like, it's like you know the answer to that question. [laughs]

   8. DCDalton Caldwell10:34

      Yeah, you're right.

   9. MSMichael Seibel10:34

      Like, the A isn't the goal, it's the representation of your knowledge and your mastery. [laughs] Like, and if you didn't, if you didn't learn something when accomplishing the goal, maybe you didn't accomplish the goal.

   10. DCDalton Caldwell10:50

       You know, you can fool investors, you can fool co-found- You can fool a lot of people.

   11. MSMichael Seibel10:54

       Employees. Yeah.

   12. DCDalton Caldwell10:56

       Yeah. People are very trusting. And so I think the way... [laughs] The mistake people make is they think that because they fooled people in a short term-

   13. MSMichael Seibel11:07

       They won something

   14. DCDalton Caldwell11:08

       ... they somehow, they didn't hit the goal.

   15. MSMichael Seibel11:09

       [laughs] Yeah.

   16. DCDalton Caldwell11:10

       They're like, "Yeah, you know, what I actually did was I got my friends and family to do blah, blah, blah," or, "What I act..." You know. There's, like, something where you're like, "Yeah, this didn't... We cheated," but no one else seems to be aware of it, so you're like, "Well, I guess, I guess this worked. I guess this is how this goes."

   17. MSMichael Seibel11:24

       So,

8. 11:25 – 12:41

   Take The L

   1. MSMichael Seibel11:25

      um, another way that people screw up the accomplishing goals is not understanding how to take the L. Okay, maybe you set the wrong goal, and instead of, um, realizing that and setting a new goal, you cheat or do one of these other tactics to try to accomplish it because you feel as though not accomplishing your goal is a failure in and of itself. Man, I find founders screw this up constantly. It's like you don't have to assume you're gonna be good at setting goals. Like, you can give yourself some slack. Assume you're gonna be bad at it, and, like, you can adjust over time. You can set better goals over time. You can not accomplish your goals and learn from it Um, there isn't this... You know, sometimes in YC, I think people feel this like, oh, we're grading them on whether they accomplished their goals.

   2. DCDalton Caldwell12:15

      [laughs]

   3. MSMichael Seibel12:15

      And it's like, first of all, we're not grading. We're not your teacher. We're not your boss. And second of all, like, your job is to work on the hardest problem in your company. Like, that, like, if you've made progress on the hardest problems in your company, you're doing well. [laughs] Like, that's the, th- that's the whole gist of this. It's not like, oh, did you like release that feature when you said you were going to, [laughs] you know, that no one's gonna use. [laughs]

9. 12:41 – 14:29

   Excuses

   1. MSMichael Seibel12:41

      Oh, man. And then you talk about excuses a lot. How do, how do people screw that up when they don't accomplish their goal?

   2. DCDalton Caldwell12:46

      I just notice a lot that when folks set goals and are not able to hit them, that's okay, but when folks are in a position where they really think it's important to make a lot of excuses on why it's not their fault and ev- it's everyone else's fault, and they just have this, like, inner desire to, like, tell me all the excuses, I think that's not helpful in that, like, again, I'm not the boss. Like, I don't care. Okay, you didn't hit your goal. Great.

   3. MSMichael Seibel13:13

      [laughs]

   4. DCDalton Caldwell13:13

      Let's move on. Like, ne- like, like it-

   5. MSMichael Seibel13:15

      [laughs]

   6. DCDalton Caldwell13:16

      ... it's like they want redemption. And so I just think that-

   7. MSMichael Seibel13:20

      [laughs]

   8. DCDalton Caldwell13:20

      ... it's good if something doesn't work to accept it, to acknowledge it, to look at it, but realize you're the boss of yourself, and you should just not feel a need to make a million excuses or have, like, like, create this long narrative where you're the victim, and everyone else, it's not your fault, and your heart was in the right place, and you did everything right, but everyone else was wrong. Uh, this is, uh, usually stuff about sales cycle. Well, you know, the sales cycle's just long, like, this is just too hard. And it's just when people do this, my message to them is like, "Hey, that's fine. I'm not saying your excuse is wrong, but, like, why are you spending all this energy trying to plead a case like you're in court that the thing didn't work," as opposed to like, "Well, move on and make something that does work. How about that?" Spend energy in a positive, proactive direction than weaving the narrative of yourself as the person who did great, but you're misunderstood by the universe.

   9. MSMichael Seibel14:16

      This is an internal tool. Like, this is a tool for you to use to help yourself. This is not a tool for you to please someone else. Like, that, that's kind of irrelevant.

10. 14:29 – 14:48

    Stupid Prizes Companies Win

    1. MSMichael Seibel14:30

       So let's do the takeaway here. You know, you set this up with play stupid games, win stupid prizes. Um, let's talk about some of the stupid prizes that we see companies win. [laughs] Where do you wanna start here?

    2. DCDalton Caldwell14:41

       Yeah. Well, that's the thing is if you set a bad goal-

    3. MSMichael Seibel14:43

       [laughs]

    4. DCDalton Caldwell14:44

       ... y- you know, if you start playing a silly game, you can win at the game. We see lots of people win at

11. 14:48 – 16:16

    Most Money Raised

    1. DCDalton Caldwell14:48

       the game. And so one of the ga- one of the stupid games sometimes people play is just how much money can I raise? The more money I raise, the better. My goal is most dollars raised, and the bigger that number is, the better I am. So you're playing the game. You won the game. Congratulations. What's the prize you win, Michael? What's the stupid prize if you play the raise as much as you can game?

    2. MSMichael Seibel15:09

       M- often you lose control of your company. So, like, when you confront the challenges, suddenly, you know, your board can fire you. Often you find yourself burning tons of money 'cause all the people who gave you money expect you to spend it. Um, oftentimes you have the wrong people on your team. You have a bunch of people who think you've made it, who think that this is, you know, the next Google, when in reality it's, it's, it, it's not. Um, and then last, you might have to change what you're working on or change the problem or pivot in some significant way, but now there are all of these people and all this money and all this momentum going down a direction that's driving your company off the cliff, and that pivot becomes 10 times harder or, or, or, or damn near impossible oftentimes. Um, but you did win the fundraising game.

    3. DCDalton Caldwell15:57

       Yeah. It's like, "Congratulations, you won the fundraising game."

    4. MSMichael Seibel15:59

       So congratulations. [laughs]

    5. DCDalton Caldwell16:01

       You won the fundraising game. Here's your prize. You have a messed up company-

    6. MSMichael Seibel16:05

       [laughs]

    7. DCDalton Caldwell16:06

       ... that shouldn't have raised all the money, and you've gotta dig yourself out of a disaster, and everyone's mad at you. H- here you go. You won the prize. Have fun.

12. 16:16 – 17:45

    Most Employees

    1. MSMichael Seibel16:16

       The next fun one is, "I want to feel like someone running a big company. I wanna have 50 employees. I wanna have 100 employees. I wanna have 500 employees. I wanna be a boss of a lot of people."

    2. DCDalton Caldwell16:29

       My metric is number of employees. I want a real big team.

    3. MSMichael Seibel16:32

       Yes.

    4. DCDalton Caldwell16:32

       I wanna move real fast. That's my game.

    5. MSMichael Seibel16:35

       Yeah. [laughs] It's al- it's always about moving fast too. That's the lie. It's like, "If we had this, we could finally move as fast as, like, uh, you know... We could finally build all the things that I want us to build." So what's the stupid prize on that one, Dalton?

    6. DCDalton Caldwell16:48

       Now you wake up one day, and you look at the spreadsheet of your burn, and you, you look at all the people that work at your company, and you're like, "Oh, no." [laughs]

    7. MSMichael Seibel16:57

       [laughs]

    8. DCDalton Caldwell16:57

       And guess what? It's now your problem because now you might have to do a layoff. You might have to let people go. You might mess up people's lives that believed in you. You might mess up that or have moral issues there. It's like the worst thing ever to over-hire and have to deal with it. And if you talk to someone that's had to deal with this, this is usually one of the more, the biggest failures if you look at your life. I know that's how I feel, like, personally, is the biggest failures I've ever had were definitely having to let people go that I shouldn't have hired. So congratulations. You win the prize. You hired a bunch of people. You're a big, important person. Now you're responsible for all of this.

    9. MSMichael Seibel17:42

       Yes. Yes. Um,

13. 17:45 – 19:33

    Execution Team

    1. MSMichael Seibel17:45

       here's the other one. I love this one. Um, "Dalton, I need an executive team. It's, it's time for my company to become a real serious company. And to do that, I need an executive team. And so I'm gonna spend the next year recruiting the executive team. Like, it's time. I'm, I'm ready to grow up, Dalton. I'm ready to grow up." What do you think about this one? H- how, how many great executives have we encountered over the years? [laughs]

    2. DCDalton Caldwell18:11

       I mean, look- I think if all you do is consume, like, VC content, you're, this is some, an idea that gets-

    3. MSMichael Seibel18:17

       [laughs]

    4. DCDalton Caldwell18:17

       ... implanted into your brain.

    5. MSMichael Seibel18:19

       [laughs]

    6. DCDalton Caldwell18:19

       And I think maybe there is a time where this is a good answer, but it's like so much of the, the VC content is aimed at late-stage founders, which is pretty weird. Um, it's like putting out content that's like, you know, how to care for your, um, your Ferrari or something. Like, like, again, I don't really know who a lot of this stuff is aimed at.

    7. MSMichael Seibel18:41

       [laughs]

    8. DCDalton Caldwell18:42

       The majority of the people that consume it are, like, two or three-person startups. And if you-

    9. MSMichael Seibel18:48

       Yeah

    10. DCDalton Caldwell18:48

        ... if all of your advice is, like, hire an executive team when you have, like, a three-person p- pre-PMF startup, like, oh, man. Like, you can get someone to leave... You can get someone with a title to leave Google or Facebook or somewhere really impressive, and you think you're, like, a big winner that you got someone from this cool company to join your company. But then you wake up, and you're like, "Wow, what did I do?" [laughs] Like, like, what usually happens is they either are, either they join your startup because they're, they weren't doing well. I'm trying to think of a nice way to say it. Either there's a reason they joined your startup and left Google, or they had expectations that you were farther along or more successful than you actually are, and they get very upset with you when they realize that your startup sucks.

    11. MSMichael Seibel19:32

        Tricky.

14. 19:33 – 21:07

    Burning Money

    1. MSMichael Seibel19:33

       All right, the next one, the next gift that you receive when you play a stupid game, we've touched on this a little bit, is, "I'm now burning tons of money 'cause I just scaled negative margins. You know, I had something that wasn't working in this city, and I expanded that thing to 30 other cities, [laughs] and now it's not working at a massive scale. [laughs] And I did it because my investors told me to, and now those investors aren't taking my phone call." And this is, like, so hard because I think people don't realize that either some stage of investors or at some point in your company, someone's gonna pull out your finances and do basic arithmetic and ask themselves, "Is this real?" And, like, eventually, you will be judged based on, like, is this real and sustainable? And if it's not, like, you know, hey, sometimes you even get post-IPO, [laughs] but, like, at some point. [laughs]

    2. DCDalton Caldwell20:32

       Yeah. And, and let me... Those people are having a bad time. We're not gonna name any names, but-

    3. MSMichael Seibel20:35

       No. [laughs] They're not having fun

    4. DCDalton Caldwell20:37

       ... it, it's, it's not... Being post-IPO and then having your stock lose 95% of its value, I don't think-

    5. MSMichael Seibel20:45

       Not fun

    6. DCDalton Caldwell20:45

       ... those people are having a good... They played a game, and here's the, like, the prize they have is, um, is having a rough time.

    7. MSMichael Seibel20:52

       So I definitely feel as though founders make this mistake of, like, "If I raise the last round by s- by massively scaling my negative margins, I'll be able to raise the next round." And [sighs] that luck runs out at some point. Um,

15. 21:07 – 22:22

    Acquiring Companies

    1. MSMichael Seibel21:07

       you know, the next topic is on, you know, acquiring companies. And, and I think that, um, this comes in a, a number of flavors. One is, once again, "We're finally grown up. We can make our first acquisition." Or like, "We wanna get good at this acquisition thing, so we gotta start doing it."

    2. DCDalton Caldwell21:23

       "There's a lot of talent out there, Michael, and some really talented failing startups would love to be a, be acquired by us, and this will help us grow faster. So we're, we're gonna, we're gonna acquire them."

    3. MSMichael Seibel21:35

       And by the way, that doesn't mean that, like, acquiring companies is bad. It, it just often means the folks who are thinking about it in startup land tend to be thinking about it too early. This is, like, another example of, like, taking later stage advice too early when, like, the advice you should be taking is, "Make your core business work." Like, just make your core business work.

    4. DCDalton Caldwell21:56

       Yeah, if you're pre-PMF, if you don't have product market fit yourself-

    5. MSMichael Seibel21:59

       [laughs]

    6. DCDalton Caldwell22:00

       ... probably you're not gonna acquire one.

    7. MSMichael Seibel22:01

       That's smart. [laughs]

    8. DCDalton Caldwell22:03

       Probably not a great idea. You're laughing, but people are probably like, "Wait, really?" Yeah, really.

    9. MSMichael Seibel22:09

       [laughs] You know, I, I, uh, Dalton, I, uh, you're right. I am laughing because that's, like, that's an inconceivable concept in my mind.

    10. DCDalton Caldwell22:17

        Yeah.

    11. MSMichael Seibel22:17

        Like, "Oh, we're, we're pre-product market fit. We should definitely be spinning up core dev."

    12. DCDalton Caldwell22:21

        [laughs]

16. 22:22 – 24:11

    What's the Prizes for Defrauding Your Customers?

    1. MSMichael Seibel22:22

       Um, here's another one that's in the news more and more lately, um, defrauding your customers, selling your customers something and telling them it's one thing, and you know it's not that thing, and your customers lose money. W- or your customers are in some way extremely harmed. What's the prize for doing that, Dalton?

    2. DCDalton Caldwell22:42

       Um, no joke, it seems like there's people going to jail and getting arrested, and people whose actual lives are now irreparably harmed by the games that they were playing to get growth or to get money. And, um, yeah, they're gonna spend... You know, best case scenario is spending years and years and years in court and in the court system and just having your life changed.

    3. MSMichael Seibel23:10

       Like, this isn't making a mistake. We, we gotta be clear here. Like, your state of mind is, is, is extremely important here. This is, like, knowingly pursuing a strategy that you know is harming your users. Like, and, and, and, um, I think what's tricky is that oftentimes people don't think this is happening.

    4. DCDalton Caldwell23:33

       I think sometimes people forget that they're not playing a game, and I think especially in COVID land, I don't know. Like, one of my explanations is if you spend all day on Twitter and Discord, and everything's a game, and everything's a joke, and everything's silly, you can kinda... I just have noticed some folks lose themselves and not realize that the numbers in the spreadsheet are real dollars. And I don't know. It's like we're not playing Monopoly. We're not playing Settlers of Catan. And I think that the, the, the, the prize that you win is the knock on the door, um, from the police. [laughs] And that's when you're like, "Oh, wow, this is, this was real life."

17. 24:11 – 29:12

    Become an Amazing Investor

    1. MSMichael Seibel24:11

       And the last one on our list, um, playing the game of using your position as a startup founder to become an amazing investor And, and I think this one's, like, really tricky because for one thing, you definitely see a lot of famous startup founders have written kind of angel and checks into companies that, that tend to do well. And so I think sometimes people confuse that for, "Oh, I should be spending a significant amount of my time looking around and trying to be an angel investor instead of making my company work." And I think that what... If I can try to explain to you what's actually happening, when you're a good founder, oftentimes you know other good people, and the opportunity you have to give them money requires almost no time or effort. And so you just... And, and, like, if you're a good founder, oftentimes people are, are offering you deals. And so, like, you know, you're spending five minutes saying, "Yes, this is an obviously good thing, I use it," or, "This is my friend, I wanna support them." And the amount of time and effort you're spending writing these angel checks is basically nil. Like, you know, I remember when I was, uh, starting Socialcam, I emailed Brian Chesky saying, "Do you wanna angel invest?" He was like, "Sure." That's it. Like, that was the, that was the entire time [laughs] that, that he spent. Uh, probably less than 15 seconds. Um, I think people don't see this, so they think, "Oh, I need to copy what I see investors on Twitter doing. I need to go network. I need to go meet founders, and advise them, and do office hours," and, like, all these things. And it's like, ugh. Like, classic example of cargo culting, right? Like, not really understanding-

    2. DCDalton Caldwell25:57

       Yeah

    3. MSMichael Seibel25:57

       ... what's going on.

    4. DCDalton Caldwell25:59

       The stupid game you're playing is a status game. Like, if you play status games, where what you wanna do is level up, you wanna put angel investor in your Twitter bio or something, okay, you're playing a status game. Fair enough. The prizes that you win playing the game is, "Congratulations. Now a bunch of your money is tied up in illiquid investments that may or may not show up." So now maybe you're, like, financially strapped. Maybe you're worried about other stuff. You're worried about your startup, so maybe you're performing worse 'cause your money's tied up somewhere. You have spent a bunch of time and stuff. You've totally pissed off your employees. Whether or not they would say it to your face, that is not a great way to win awards with your team. [laughs]

    5. MSMichael Seibel26:44

       Yep. You're a scenester. Congratulations. Yeah. So I think to wrap this up, right? Sometimes founders don't think enough about the bad consequences of the games they're playing, [lips smack] and once they really do the whole logic tree down to the end, they'll realize that maybe it's not worth playing those games, and you might as well just build a good business. And even if that's a tricky message for you to internalize, think about what you're teaching your team if you're making these mistakes, right? Like, they will copy what you're doing 'cause you define success in your company. And so even if you're like, "Oh, for me, this is cool," right? Like, you know, perfect example, if, if becoming a status-seeking angel investor is, like, what seems cool in your company, people in your company are gonna start trying to do it [laughs] instead of doing their work. And so-

    6. DCDalton Caldwell27:41

       If they see fudged numbers

    7. MSMichael Seibel27:42

       ... um, make sure... Yeah. People in the company start doing it. They... Like, it's, it's kind of like a little bit, you know, we're both parents, it's kinda like, hey, like, if you don't want your kid to be a screw-up, you don't do screw-up shit in front of them. [laughs] Like, it's, like, a pretty simple, like, [laughs] like, one-to-one here. Like [laughs] ... Um, and on the flip side, to kinda end with a positive note, some of our best companies get so good at goal setting and accomplishing goals that they, they move faster than we would ever imagine possible. Like, they are just machines at doing this well. And I would argue that most people don't start doing this well. Most people who focus on setting goals and accomplishing them get better at it over time, but man, the rate of improvement is sometimes shocking. You know, sometimes there are founders who are kind of fooling theirselves, who are thinking like, "Hey, I'm smart, so I can coast on this stuff." It's like, man, outliers are smart, and great executors, and great trainers, right? [upbeat music] Like, they have multiple things they're great at. They don't sandbag themselves. Any other thoughts here, Dalton?

    8. DCDalton Caldwell28:56

       I think we're good. I think that's well said. Thanks, man.

    9. MSMichael Seibel28:59

       Awesome. Talk to you later. [upbeat music]

Episode duration: 29:12