Gokul Rajaram: How to Analyse for Durability and Defensibility in a World of AI

I call it the eight moats. Data moat, workflow moat, regulatory moat, distribution moat

We're on number five. I'm loving this. [laughs]

Ecosystem moat, network moat, physical infrastructure, and the eighth one I would say is scale moat. And I think anything four or more, you're pretty damn secure.

[air whooshing] I'm thrilled to welcome one of the best operator turned investors of the last two decades, Gokul Rajaram.

You cannot be a single product company. Vertical products, you've got to really own full stack. It's harder otherwise to be a 10 plus billion dollar company.

What's the biggest miss? Is it Banter?

Most recently, Quince, but to be honest, even bigger miss than that in some ways. It's not a miss in terms of investing, it's that-

[clapperboard snaps] Ready to go? [upbeat music] Gokul, I've wanted to do this for years, and you have... I mean, you've coyly played hard to get, let's put it mildly, uh, after my continuous WhatsApp messages. But thank you so much for joining me today, man.

It's my pleasure to be here, my friend. Thank you again.

Now, I wanted to start with how some of your prior companies that you've worked at have shaped your investing mind specifically, and I wanted to start with Google. When you reflect on your time with Google, how did that shape your mindset for the types of companies that you like today?

I think the best way to think about my, the Google experience is Google taught me that ultimately the best companies have a remarkable product at their core. Google was a remarkable product. Google was definitely a philosophy of build it remarkably and they will come. Uh, GTM was not Google's specialty, but what Google was really good at was building amazing products. Sometimes the go-to-market worked, sometimes it didn't work. So but at the core was a remarkable product. So I think I... Ultimately, my core investing thesis is that if there is not a remarkable product, all the go-to-marketing distribution in the world will not save you. So that's-- I look for what the remarkability is in the core product or value proposition of the company. Is it 10X, 100X better than the alternative? I'll tell, I'll tell you a story at Google. When I joined in 2003, there was a project going on called, um, Caribou internally. I was like, "What the hell is this?" This was web email which gave one gigabyte free storage, and back then Yahoo Mail offered 10 megabytes of storage, so it was 100X. I thought it was truly... I was like, "There's no way it's possible." And it turns out it was, and it was released on, if you remember, April 1st, 2003, and that people thought it was an April Fool's joke, but that was Google literally taking something that was unbelievable and making it reality. And so that's, that's the kind of products I like, something remarkable, something unique, something powerful.

I like it. It reminds me of actually Neil Mater, who talks about kind of jaw-dropping customer experience as one of his kind of core monikers for thinking about companies and investments. [laughs] Next, we have Facebook. How did Facebook impact the types of companies that you like?