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

Kunal Shah is one of the most well-known and admired product leaders in India. He is the CEO and founder of CRED, an Indian-based fintech startup valued at over $6 billion. Prior to CRED, he founded three other startups, including Freecharge, which he sold for over $400 million to Snapdeal. He has also been an advisor to India’s most influential organizations. In our conversation, we discuss: • The prevalence of successful Indian immigrants in top CEO roles across the tech industry • Why companies in India can grow DAUs but not ARPU—and what that means for building products for India • What most sets India’s market apart • Challenges and opportunities in the Indian market • The Delta 4 framework for building new products • Lessons from building CRED so far • The power of curiosity and second-order thinking • Lessons from failure — Brought to you by: • WorkOS—The modern API for auth and user identity: https://workos.com/lenny • Orb—The flexible billing engine for modern pricing: https://www.withorb.com/lenny • Dovetail—Bring your customer into every decision: https://dovetailapp.com/lenny Find the transcript and references at: https://www.lennysnewsletter.com/p/kunal-shah-on-winning-in-india-second Where to find Kunal Shah: • X: https://twitter.com/kunalb11 • LinkedIn: https://www.linkedin.com/in/kunalshah1/ • Podcast: https://www.youtube.com/@CRED_club Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • X: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ In this episode, we cover: (00:00) Kunal’s background (04:22) The Delta 4 framework (11:00) The success of Indian CEOs in the U. S. (19:55) Challenges and opportunities in India (23:04) DAUs vs. ARPU in Indian markets (25:50) The perception of time in India (27:55) The curse of focus in Asian markets (30:33) Challenges and opportunities in India (continued) (33:23) Lessons learned from building CRED (36:40) Profit pools can provide valuable insights into the values of a country (37:55) Founders’ role in company growth (39:55) Profitability and Indian business culture (43:24) Advice for staying positive amid criticism (44:41) The promising market in India (47:35) The power of curiosity (52:59) Who Kunal looks up to (55:31) Kunal’s favorite sources of content (58:42) Asking great questions (01:02:54) Contrarian corner: Wealth is nothing but storage of energy (01:05:26) Failure corner (01:08:57) Closing thoughts: Share your learnings (01:09:38) Lightning round Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email [email protected]. Lenny may be an investor in the companies discussed.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Lenny Rachitsky?

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

• 0:08Speaker 01

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

• 0:16Lenny Rachitsky?

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

• 0:21Speaker 01

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

• 0:27Lenny Rachitsky?

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

• 0:30Speaker 01

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

• 0:48Lenny Rachitsky?

  Today, my guest is Kunal Shah. Kunal is one of the most well-known and respected entrepreneurs and product leaders in India and around the world. He shares endless wisdom on Twitter and LinkedIn where he's got over 1 million followers. He's the CEO and founder of Kred, a fintech startup based in India, which was last valued at over $6 billion and as of a couple of years ago, processed over 20% of all credit card bill payments in India. Prior to Kred, he founded three other startups, including Free Charge, which he sold for over $400 million to Snapdeal. Kunal is a deep thinker, both about product and about life.

• 1:27Lenny Rachitsky?

  His background is actually in philosophy, which comes across very clearly when you hear him share his advice. In our conversation, we get deep into what makes working and building in India different from the US markets and other markets, including why trust is so essential and why so many people are so much more risk averse in India. We talk about the biggest challenges and opportunities within the India market, why there are so many successful Indian immigrants in CEO roles across tech and what we can learn from that. Also, why companies in India can quickly grow DAOs but not ARPUs and what that means for building products in India. We also talk about how to stay curious and open-minded in the power of second-order thinking, also stories of failure and Lots of contrarian takes and so much more.

• 2:13Lenny Rachitsky?

  If you enjoy this podcast, don't forget to subscribe and follow this podcast in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously. A big thank you to Cyan Maiti for making the connection to Kunal. With that, I bring you Kunal Shah, after a short word from our sponsors. This episode is brought to you by WorkOS. If you're building a SaaS app, at some point, your customers will start asking for enterprise features, like SAML authentication and SCIM provisioning. That's where WorkOS comes in, making it fast and painless to add enterprise features to your app. Their APIs are easy to understand, so that you can ship quickly and get back to building other features.

• 2:56Lenny Rachitsky?

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• 3:42Lenny Rachitsky?

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• 4:25Lenny Rachitsky?

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

• 4:29Speaker 01

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

• 5:02Lenny Rachitsky?

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

• 5:46Speaker 01

  Yeah, it's called a Delta Four framework, but I think it's actually quite simple if you think about it. A lot of people say that your product has to be 10x better and it's not very measurable. You don't know if you're 10x better or not unless you're delusional. And the trigger for me was actually, I'm the unusual tech founder in India. I'm a philosophy, I'm the only humanities philosophy major founder in India who's got into tech. And I often wondered that most people who were my peers or people who were ahead of me were significantly smarter academically or otherwise. And why did I become successful with my first startup, FreeCharge, which I exited in 2015 for nearly like $450 million? And I was like, what would make this happen?

• 6:31Speaker 01

  Because I would not qualify into this super league of really top IIT rankers that exist in India. And and that got me onto this philosophical quest to find out what makes things successful. So the simple framework is like an example I give often is that imagine uh the old way of taking a cab ride and an Uber, right? And if I asked you, give me this score of efficiency on Uber and let's say getting the old cab, what would you say, Lani? I'm curious, like out of ten.

• 7:00Lenny Rachitsky?

  Yeah, give a cab like a three and an Uber like a, yeah, like a nine.

• 7:04Speaker 01

  Yeah, so every time you see that the the product efficiency delta is greater than equal to four, three things happen. Uh, it is irreversible. Second is that you have very high tolerance for it to fail. I think if Uber fails a little bit, you will you say, oh, my God, that I'm going to like really stop using it? No. And the third thing is that uh I I call it the uh U B P, Unique Bragworthy Proposition. So every time humans unlock a Delta four product or service, they cannot stop talking or sharing about it.

• 7:46Speaker 01

  And therefore, all Delta four products will naturally have lower CACs or sometimes zero CACs. Because people, humans, and and think about Lani, how you discovered Uber, definitely not through an ad, definitely not through some performance marketing here and there. Somebody showed you the demo and you were like, my God, this is crazy. And that's what I'm seeing right now, what's happening with everything on OpenAI and everything that is happening around L L M. Feels like magic and it's kind of Delta four because the efficiency of doing things before and after is now showing that. But the the failure is the real problem, right? And and making everything tech does not make things more efficient. Let's take about it, talk about example, uh, buying a suit for you uh online versus offline. All tech, cool stuff, all this features built in.

• 8:30Speaker 01

  Uh, what would you say the efficiency of buying a suit online is versus, let's say, buying a suit offline?

• 8:35Lenny Rachitsky?

  I've actually done that and it was a terrible, it did not fit at all. Uh, and so like it's efficient, but the yeah, the end result was not is I it's probably often not not great, so it's probably.

• 8:45Speaker 01

  Overall efficiency score, what would you give?

• 8:48Lenny Rachitsky?

  Of uh buying a suit online?

• 8:50Speaker 01

  Yeah, I was offline.

• 8:52Lenny Rachitsky?

  Like I'd probably give it five and five like on offline is actually probably better experience.

• 8:58Speaker 01

  Yeah, that's crazy, but because you've broken the principle, this is a tech product. But the efficiency is better offline and therefore when the delta is lesser than four. What you will discover is that it is reversible. You will not see people bragging about it, right? And you have zero tolerance for it. So you will never go into buy suit online, I can tell you that right now, right? So I think it's a simple framework. I believe that if many companies applied, so I know now many VCs in the US use this as part of the training program for the analysts, I know about it that somebody in Sequoia mentioned this to me that they have this part of the thing.

• 9:41Speaker 01

  But in India, we are like not still applying many of these things. I think it's a simple framework to at least know. And you can apply this to features, you can apply this to products, you can apply that to business. And oftentimes, this is a longer concept, we can talk about it in many ways because it's derived out of some study around entropy and something about evolutionary biology, which is the root of how I discovered and thought about Delta four, that when does a species get disrupted? Or and what is entropy and why does low entropy require growth of high entropy? And like it's a it's a it's a day long podcast on its own, so some other time.

• 10:20Lenny Rachitsky?

  Okay, we'll save that for a future follow up, just diving in on the psychology of Delta four. Just to kind of summarize this, because I think it's such a powerful framework and I find it useful to convince founders why their product isn't taking off. They may feel like this is better than like the classic example is a better Excel. Look, this is so much better than Excel, it can do all these things. You don't have to learn all these formulas. But the trick here and that I love is just what would people rate the existing solution one to 10? What would they rate your solution one to 10? And that's to be four points higher, otherwise no one, no one's going to pay attention. And I think, I think it's pretty simple, people are busy, they have enough things to do, they have enough products and apps, they're not gonna. Take the time to really dig into something if it's not that much better.

• 11:00Speaker 01

  Absolutely.

• 11:01Lenny Rachitsky?

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

• 11:41Lenny Rachitsky?

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

• 11:55Speaker 01

  It's a great question. I often, often wonder about it. And I have had the good fortune to meet a fair bunch of these individuals and had a chance to really explore with them what really went on. So there are a few things that pop out. And again, these are all conjectures, which I can't prove in any ways, but it's a thought experiment anyways to talk about these things. First is, in general, immigrants that get out of the country are usually have chip on the shoulder in a very different way and the struggle that they have to go through to just get out and be successful. And that hunger that got them there, there was no privilege, like they came from very,

• 12:38Speaker 01

  very humble backgrounds and literally no money to start with. So I think that this force is real, right? But I can say that for many immigrants in general as well, but appreciation for math in general or logic, which came through society in a big way, right? Kind of gave, let's say, for example, lots of engineering graduates come from only a few countries because the society was bent towards, let's say, earliness of mathematics or earliness of this. And I think that kind of helps create status that what will get appreciated. For example, being an engineer, being a doctor, like philosophy measure, I was a write-off for the society. Right, so the reason I am the rare commodity over here because you you are not considered

• 13:21Speaker 01

  to be very bright unless you break into these very hard exams and very, very hard things. So the filtering criteria on its own is big. But there's another interesting framework altogether, which I have actually learned from this gentleman Devdutt Patnayak. He he he applies Indian mythology and management principles together. And it's an interesting thing that there are three major Indian god, one is the Brahman, the god of creation, Shiva, the god of destruction. I'm I'm super generalizing, but that's the classification. And and the third is like Vishnu, which is the god of sustenance. And there are avatars, the the word avatar comes from Vishnu, keep changing avatar, right? So we have had Rama, Krishna, all these guys are avatars of of this.

• 14:04Speaker 01

  So what you notice is that if you took a two by, take a two by two of people who are high on values and low on values, are high on obedience and low on obedience. Hmm. You make an interesting two by two, right? Now, Lord Krishna, which is a one of the very popular avatars, which was non, I mean, puts the, suits the entrepreneurial category, which is high on values but very low on obedience. He was known to be the naughty god and he could actually create lots of things. And there is Rama, which is known to be the one which follows principles and obedient, right? So they they will follow Dharma and and scale on that. And and then there are these notorious characters, there's Ravana, which is low on values, low

• 14:48Speaker 01

  on obedience, and there is Duryodhana, which he says that he's low, high on obedience but lower values, right? So these are the people that you don't want to be. And what you notice is that a a lot of CEOs have done well because they follow the Dharma of the founders quite well. They they have not diluted the Dharma of the founders who have started these companies and managed to sustain that. And a lot of CEOs have this need to say, oh, I'm gonna change the company forever and it will be my identity and I will change the logo and I will change the name and I will do all sorts of things, right? But maintaining Dharma, right, where I will say that these are the principles that were given to me and I'm gonna sustain this and make it even bigger.

• 15:32Speaker 01

  Comes from humility of saying that there is something built with some pure form factor. And I think therefore that that character stays on, right? And therefore, the the characters of Brahma and Shiva are the founders. I'll create and destroy like that's the thing, but the sustenance is is the harder one. And and therefore, avatars keep happening uh uh over and over of time and and different hurdles come and different levels come. But when you when you think about uh the the archetype of at least the Indians here, I have seen that they are fabulous at moving between Krishna and Rama all the time, right? They can play this consistently uh and therefore they keep evolving and and keep making these companies bigger and bigger.

• 16:14Speaker 01

  And I think we we'll see a lot more of this in years to come because now they have the role models of these individuals who have kind of done well. But the the key principle is that if you ask the founders, they will love these CEOs if they are around because they maintain the dharma of the thing. And and for example, I say what Tim is doing is maintaining the dharma of Steve Jobs. Because if you had tried to change the dharma of Steve Jobs and what the values the companies are, it's very hard to imagine it to be sustaining itself forever and ever.

• 16:45Lenny Rachitsky?

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

• 17:19Speaker 01

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

• 17:54Lenny Rachitsky?

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

• 18:02Speaker 01

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

• 18:29Lenny Rachitsky?

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

• 18:39Speaker 01

  It's a great question. I don't think they consciously think about it, but I think if they ever heard this, they would agree with this because that's what they grew up with and and the value systems are much more long term. For example, I believe all bad behavior in humans humans come from being short term, right? And and being long term comes in a very it's a it's a big choice to make. And and a lot of times, a lot of people argue that, oh, we have arranged marriages and like it's 95% arranged marriages and less than 1% divorce rate comes from this whole long term thinking, right? That people are married through values versus attraction or lust

• 19:24Speaker 01

  and all of that stuff, but more long term oriented and about building a family, building values or low divorce rate and about we'll fix along the way versus trying to say, oh, I need to evolve and I need to move forward. So I think being long term about that mindset and that's why some cultures last for thousands of years because of this need for everybody to be more long term versus short.

• 19:52Lenny Rachitsky?

  US could use a lot of that these days. You mentioned this interesting fact about how in India, so the fact that most startups fail, you said, you know, I think the classic stat is ninety percent. And that the risk is a lot higher to start a company and then fail. Can you just talk about what that, what impact that has? How do people try to avoid that? Because that's, that'd be amazing if you can reduce the risk of starting a company. Or is it just it happens and people get super in debt?

• 20:20Speaker 01

  I think long-term societies are naturally more risk averse.

• 20:26Speaker 01

  Right? And not all great CEOs can become great founders for the same reason. In fact, I would say that it actually makes it very hard to be a founder if you've been a great CEO. Because you've turned into this sustainer versus destroyer or creator, right? So the nuance I'm talking about is when you are thinking about like risk appetite, India is changing because now for the first time we're seeing founders being respected and talked about and unicorns being celebrated. And our, our prime minister talks about startups quite openly. We have a national startup day and so on and so forth. So I think there is a thing that has changed this thing. But the core principle, let's understand the core human behavior basics.

• 21:11Speaker 01

  India still has large arranged marriage.

• 21:16Speaker 01

  And if you are a founder and a failed founder, your chances of getting a person to marry is still a hard thing to achieve. So if this is all true, then the appetite to take risk will be controlled, right? And somebody gave an interesting example to me that there's a very large, let's say, FM, CPG company in India. And let's say you do a zero to one over there and, and the CEO changes in four, five years and your, your zero to one failed, but you were the best person. That's why you were given the zero to one. The next year you're like, so what have you done in the last five years? It's like, nothing, I just tried to launch it, failed. And, and you neither get a promotion in the company, neither a new company will say, oh my God, I'm going to hire this talent.

• 22:00Speaker 01

  So the guy who stayed on this stable brand within the CPG company kept growing, but that has natural tailwinds. All he has to do is nothing in that brand. And then suddenly what you see is that he or she's like managed to do well. And this guy's zero to one has not done well, so. We do not celebrate risk takers of the country yet, and I think we'll change that. I think it's changing already, but we have a long way to go. One of the beautiful things I often talk about is that I was in Portugal once and I saw, I don't know if you have ever been and seen this, but in the church, normally, let's say only the royalty is allowed to be buried or cremated or whatever, like they are there.

• 22:43Speaker 01

  Only one more category that is allowed is the explorers. Vasco de Gama, all of these guys who explored the world and took risk and took the country forward. They were given the same position as the royalty, right? So when we give the highest status to risk takers, the country appreciates it. Because ultimately, we are all looking for markers of social validation.

• 23:05Lenny Rachitsky?

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

• 23:35Speaker 01

  So I think ARPU is a function of per capita income of a country, right? You cannot make hundred dollars per user from a country for a product when their income is, let's say, two thousand five hundred dollars per year as an average for the whole country, right? So what happens is many global companies love to come to India because we have the cheapest data, very high smartphone penetration. So if you look at a lot of global giants, they'll have five hundred million users from India or sometimes a billion numbers coming from Asia. And they don't have huge ARPUs, but they help you show the user growth, which helps you in your public market and therefore improve your valuations, right?

• 24:16Speaker 01

  For example, my guess is that, I don't know if this data is public or not or talked about, but my guess is that Meta would not have more than three or four dollars per user per year monetization in India. But if you look at the user growth in India, it'll be huge, right? So a lot of times. For global companies, India becomes a great MAU farm, but very low on ARPU. And therefore, a lot of Indian founders who tried to copy the Western markets saying, oh, I'm gonna have a few hundred million users. Make a terrible mistake because they will need to then go abroad to find their ARPU's to balance the act.

• 24:52Lenny Rachitsky?

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

• 24:58Speaker 01

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

• 25:37Lenny Rachitsky?

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

• 25:49Speaker 01

  Absolutely. One more thing is the value of time as a concept, right? So one of the things you'll notice then is that no Indian has ever been paid an hourly salary in their entire life. Right? But let me ask you a question. What was your first ever job and how were you paid?

• 26:03Lenny Rachitsky?

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

• 26:12Speaker 01

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

• 26:23Lenny Rachitsky?

  Yeah.

• 26:23Speaker 01

  But if you ask most Indians, and if you ever come to India and do this exercise when you meet them, ask them what's your income per day or income per hour. Nobody will be able to answer, no matter what their job is. They could be staff at the restaurant, to somebody who's doing really basic work, to anybody of any fancy job, because we've never, ever been paid an hourly salary. So when you are not paid an hourly salary, the concept of time is not the same. And then the concept of time is not same, paying for time is hard to do, right? And therefore you'll see a lot of Indians who make, let's say, I don't know, maybe a hundred dollars an hour,

• 27:04Speaker 01

  uh, uh, still spend an hour to send ten dollars on a flight ticket because that's what it is. And, and if you, by the way, discuss that with many of the Indians in the West also, you'll realize that this is a common joke, that they will still fight for the ten dollars because the value of time is something that is harder to get used to unless from your childhood that the unit of time was moved smaller and smaller.

• 27:29Lenny Rachitsky?

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

• 27:35Speaker 01

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

• 27:44Lenny Rachitsky?

  Wow.

• 27:45Speaker 01

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

• 27:54Lenny Rachitsky?

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

• 28:25Speaker 01

  Yeah, I think one is you make very little per user, so you have to do many things. But also all low trust markets, and I let me define low trust markets as where consumers are a lot more wary of trying new things. Uh, because there are not institutions that protect you against a bad behavior done by a company, right? So for example, if I ever had a fall, uh, in a coffee shop in the U S, I can think about suing them and making money off it. In India, you only worry about, I'm gonna pay my thing, and you don't even think about suing the coffee shop or you're hoping that you will get any money for that. So what happens is in a low trust country, uh, uh, and it's, all developing nations are low trust by design. Uh, because the institutions are not strong enough to kind of really, really take care of many things.

• 29:09Speaker 01

  What happens is there is concentration of trust. So you will see that super apps, superstars, super companies all exist in low trust markets because the lack of trust creates concentration of trust. Right? And therefore, you will see one app can do four hundred things. For example, we have a company like Tata that can do salt, to car, to jewelry, to anything. And people will buy because it's a Tata brand because it comes from a low trust society trusting the brand and not being, oh, I'm going to go as preferred this new brand. And the joy for trying new things is not so high in low trust nations.

• 29:47Lenny Rachitsky?

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

• 29:54Speaker 01

  It's funny, but the oldest brand in the world is a brand called as Chavan Prash. It's a guy named Chavan who built a Prash is a sort of a taste that you can have for good health. And it was built in India many, many, many, many centuries ago. And but lots of Indian businesses still have the name of the person behind it. Even the US is like that, like JP Morgan, all these guys are not some fancy name, they're the name of people. And therefore, in India, trust still comes from a lot of names of people who have a lot of trust behind them and reputation behind them.

• 30:33Lenny Rachitsky?

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

• 30:51Speaker 01

  Sometimes I wonder if the challenges and the opportunities are exactly the same. For example, one of the biggest challenges we have is we have very low female participation of labor compared to many markets. But I also believe it's an opportunity because you can, let's say, use AI and create many new types of businesses and opportunities. Because now, like, work from home is not a alien concept anymore. You can actually create very interesting businesses for that. Number two is we are.

• 31:22Speaker 01

  Low on per capita income. So what AI can do instead of taking our jobs away, just make us brighter. Because now, like Satya talks about, that now expertise is available in here.

• 31:34Speaker 01

  So you can actually just kind of ride on that and really make the world very equal in many, many ways, right? So that's massive opportunity and also the challenge because I often make this joke that the largest employer of the world is inefficiency. And if you take that away too quickly, we'll have a very, very jobless world, right? So the thing is that it can be an opportunity for a country like India and also potentially a threat. Because we don't start becoming great at AI. I was actually just telling somebody today that maybe all of our interviews should become about giving a task that they can only perform if they were very good at AI. And no matter what the job is, you make that the minimum criteria that if they cannot use that, leverage that,

• 32:19Speaker 01

  they'll become a liability in five years anyways. And last one is, we have a very young demographic, very well positioned with access to technology, access to smartphones and so on and so forth, a lot of hunger. But our challenge is also that it's also the first generation that is truly learning what is entrepreneurship, what is risk? And we'll make all sorts of mistakes, get there and I hope we don't go into shell after having these large scale failures that you have not seen before. India is not used to layoffs, like startup world is used to layoffs. But in India, if you start a new layoffs, it becomes the national news and all sorts of discussions happen over here.

• 33:01Speaker 01

  So we are not there yet. So we are stuck between like being somewhat of a collectivist or some of our individualistic societies. We are somewhere, India is a great remix of everything.

• 33:14Lenny Rachitsky?

  Hmm. I love this line you just shared of inefficiency is the largest employer in the world.

• 33:22Lenny Rachitsky?

  I totally get that. Okay, so let me talk, let's talk about cred for a bit. So you had, I think, three startups before cred. Okay, and then you've been building cred for about six years now. I'm curious, just along this journey of cred, what you've learned or changed your mind about during this phase of your career versus previous phases?

• 33:45Speaker 01

  I think cred's insight was actually quite simple. We realized that unfortunately, the value of time and per capita income is concentrated in 25 million families. And therefore focusing on them is important and they are lot more global in their approach versus rest of India. So, so you have to build them very differently. And I realized that ability to focus on a customer set, which is not historically possible to do because everybody, every investor expected us to be the next China. And the only similarity of India and China was the population and nothing else was similar. So I think having that conviction that I'm going to build only for this folks and this large enough market.

• 34:27Speaker 01

  Thankfully, I had one success for somebody to bet. So our like our series A was $25 million. I would have not had that luxury if I had no success in the past because I had no product with any monetization to prove that I'm doing the right thing. It turned out okay, but I think I could get a lot of people to take risk behind my insight or my thesis is because I focused on the right customer category and built on it. But I think the few things I've learned differently is that companies that are very, very good at zero to one will not naturally become great at 10 to 100. There are lots of different lessons to learn. The founder has to evolve. The biggest thing that has to happen. Most people at cred are people who have not seen a bigger business than cred,

• 35:10Speaker 01

  which comes at its benefits and costs. So you have to gentrify the org every now and then to make people understand the value of many of these reliable things. And, and I often tell people that entrepreneurs are uncertainty observers.

• 35:24Speaker 01

  Uh for everybody, for for employees, for investors, for customers, they they are a and therefore they they they they get rewarded for being those people to remove uncertainty from people's lives. Uh but the kind of expectations keeps changing at the company of scale. For example, if you have a uh uh let's say a a seed stage investor, they they are very used to very high uncertainty and they they are happy with some absorption. But as you get to growth investor and let's say you had sovereigns on your cap table, the the amount of stability you need to provide is significantly more and and therefore you need to evolve very, very differently. So I think those are the few lessons I have learned. Talent, you start realizing that not everybody can scale into everything

• 36:06Speaker 01

  a and and you cannot expect that you can give up the zero to one D N A just because you're building ten to hundreds. How do you kind of coexist with those things? How do you react to big changes in the market and not become this slow company? Uh uh and every company goes through that. I I mean, if you look, look at what Zach went through in the last three or years was that he had to, I I often say that he had to play the shiva, come and do a lot of destruction to become big again, right? So I think that's what founders can do, uh and and and it's not easy to do. One of the things I've learned is that profit pools of a country tell you a lot about what the country values and trying to

• 36:49Speaker 01

  uh copy somebody else's profit pool to your country will not be a wise idea because the country's values are demonstrated in what profit pools exist. Let's take an example. In the thousand most profitable companies in India, the number of retailers would be probably two or three. But if you look at the Western market, you will see a bunch of them because uh it's a consumption market plus very high divorce rate means you are always peacocking again in the market again. You're trying to be fit and be uh cool and all of that. India has very low divorce rate, less than one percent. Uh uh arranged marriages uh and fashion spend and because we have a a lower female participation of labor, India is probably the only market where female fashion spends is less than men's fashion spends.

• 37:33Speaker 01

  Everywhere else it's probably five, six X more for them. So what happens is you start appreciating what the country values. For example, I have noticed that many patriarchal societies have very significant market cap in financial services versus consumption.

• 37:50Speaker 01

  And these broad patterns you start thinking about very, very differently.

• 37:55Lenny Rachitsky?

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

• 38:25Speaker 01

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

• 38:38Lenny Rachitsky?

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

• 38:42Speaker 01

  Absolutely.

• 38:43Lenny Rachitsky?

  Amazing. I love this. All just ties back to your philosophy background. I love it. It's beautiful. This episode is brought to you by Dovetail, the customer insights hub for product teams. Are you working in a feature factory building filler that nobody wants? Probably because the sad truth is that most SaaS features are rarely or never used, costing the industry billions every year. Let's change that. Product managers, Dovetail is holding their first industry conference. It's called Insight Out and they want you to come. Over one day in San Francisco, the product community is coming together to learn how to better leverage customer insights and build products that people actually love to use.

• 39:25Lenny Rachitsky?

  It's on April 11th and you can hear from product leaders from Uber, Twitch, Meta and Netflix as they share their strategies for driving innovation, thriving in uncertainty, and balancing customer-centered work with business needs. And here's the kicker, it's absolutely free for online tickets. Just go to dovetail.com/leni to register. This is thanks to Dovetail, the best way for product teams to get the most out of customer insights. Check it out at dovetail.com/leni. Okay, so on cred, so here's a funny thing that happened. I asked people on Twitter what questions to ask you on this podcast. And one of the most common questions was, when do you think you'll become profitable? Which is interesting, because when I have other CEOs

• 40:09Lenny Rachitsky?

  that are founding a company that is, and most companies aren't yet profitable, nobody's asking that question. So I'm just curious, why? Why is that such a common question that comes up?

• 40:17Speaker 01

  It's fascinating. It's fascinating. As a country, most businesses are trading. You buy something at low cost, sell at a higher price, and you make profit. Most of our businesses, most of our family businesses were trading, right? But building a CapEx-heavy distribution, monetizing it later on, focusing on high revenue growth rate versus trying to get profitability first, is not known to us, right? So when they see these large numbers of losses, like there's a shock that, why would somebody give you this kind of money? Like, and then, by the way, my, my own dad wouldn't respect

• 40:59Speaker 01

  me till I was a profitable company. So it's not surprising that people in India have these comments. But it also comes from not understanding how businesses are built in internet world where VCs are giving you the capital to kind of build distribution, unique product, edge, brand, all of that stuff, and then monetize later on, and monetize big, and then have very large profit pools to go after. But a lot of times, this comes from not understanding this business. And I feel it'll change, because many internet companies are now getting very profitable, public listed. So we'll have a decade.

• 41:39Speaker 01

  Let's understand one thing, like in the US, maybe 27, 30% of US market cap is now tech companies. India, tech companies would probably make less than 2, 3% of the market cap. So we are mostly, and I'm not saying India has this fabulous history of building very, very profitable tech companies. We are probably the first generation that will have to prove ourselves to be very large profitable companies. But we are still figuring out what this means. And the fact that this question, by the way, I can tell you one thing, that I have been asked this question by People on Twitter, way more than my, any of my investors ever asked me this question, which also creates an arbitrage for entrepreneurs who can actually build businesses and ability to raise capital

• 42:22Speaker 01

  and improve their business model with very revenue, high revenue growth rate and build large brands and so on and so forth. But I find fascinating as well. Also, one thing you'll see fascinating in India is that there is like immense amount of trolling and doubt that will come in your comments. No matter what you do. So if you see any founder in India, they'll post something about their thing, the comments will rarely have appreciation. So it feels sad because when you see global companies do stuff like India will lose their shit on Apple Vision Pro and all this stuff and like the Twitter will go gaga over it. But I think when it comes to, and I believe envy is hyper local.

• 43:07Speaker 01

  We do not envy Elon Musk for all the stuff he does because he's so far away. But we envy our own because they were just like us not many years ago. And therefore envy is like wifi. It's like a, like an hyper local service.

• 43:25Lenny Rachitsky?

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

• 43:35Speaker 01

  It's funny, the number of calls I've got from founders who start getting hit and the go to person to get this call because they've seen me get it for many more years. And I tell people that we couldn't have made it this far

• 43:50Speaker 01

  if we cared about criticism of everybody versus people who've done better than us. If somebody who's done anything better than me gives me any amount of criticism, I will absolutely flip and make all the changes and evolve. And I seek feedback all the time from people. But if I start taking feedback from everybody who do not understand the nuance and empathize with what I'm doing, I'm not saying that we should not take customer feedback. That's very different. But let's say somebody commenting about your business who does not understand the nuance of it. You can't be reacting to everything. And I often tell people that, no, there's a reason

• 44:31Speaker 01

  elements with lower valences are called noble gases because they're hardest to get reaction from.

• 44:37Lenny Rachitsky?

  That's over my head, but I love it anyway.

• 44:42Lenny Rachitsky?

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

• 44:59Speaker 01

  For all the challenges, India remains the most promising market that one can be building for right now because everything is going our way. We have all sorts of digital public infrastructure, government support, all these great people doing extraordinary things, apart from the Twitter noise. And Twitter is designed for outrage, getting likes. So I wouldn't read too much into it. But I think all of us are doing well because we have an audience set, an award ecosystem that is fully supporting us and really taking it forward. So I think I wouldn't want to be anywhere else in building because of this

• 45:39Speaker 01

  extremely vibrant, crazy opportunity that one can learn from. However, I wish, I often wish that, I wish I could get a one-month internship with Brian and learn how to do things. And I've never had the luxury, I can only watch his podcast with you to learn a few things. But what if I got a chance to be there? And I miss that part, that I've never been really trained by these extraordinary product brains, or even observe them make decisions. So I recently posted one thing that, you know, the word "operation theater" comes because operating used to be a public process and people used to pay money to watch surgeries and see all the bloody gory stuff, even before anesthesia was born. And there's

• 46:23Speaker 01

  so much joy in seeing somebody do their action. And I wish there was theater for Brian take a product decision, take a hard call on killing a product, or seeing Tim rejecting all the ideas that they have to before the GTM of a product. I think we could benefit so much from that. And unfortunately, it remains in very small circles. And like I said, at the beginning, I said, you do a fabulous job of removing some of the information asymmetry and kind of making it more democratic. But there is so much more that we all could learn. And I feel extremely envious to many people who have the opportunity to kind of work with the best of the best, because many of us from India never had the luxury. We had to figure out everything on our own.

• 47:10Lenny Rachitsky?

  Wow, how cool would that be just to have a camera in some of those meetings just as a learning experience? Because like very few people are in those rooms. And there's so much to learn. I think though people will find, holy shit, this one, this is how decisions are made. What is going on? And two is like, uh, I don't want to work for this person. This sounds very difficult and stressful. Those are probably some takeaways that will emerge. Kind of along these lines, something that comes up a lot in your talks and work is curiosity. You have a show called Credit Curiosity. You often talk about the power of curiosity. I'm just curious.

• 47:49Lenny Rachitsky?

  Why is curiosity so important to you? And why is it important for other people to always stay curious? And what value is there?

• 47:57Speaker 01

  I think a curious person is somebody who is constantly demonstrated, demonstrating that they are not proud of their expertise.

• 48:08Speaker 01

  And they will demonstrate extraordinary amount of excitement when they face a problem which they have no clue how to solve.

• 48:17Speaker 01

  Uh, and therefore a lot of people stop growing because they want to constantly demonstrate their expertise. Versus demonstrate their curiosity. Right? Because curiosity should come from security because you. Imagine I was in a, I'm the founder CEO of this company and this group of sixty people on WhatsApp, somebody posts something, I'm. And ask a dumb question, what does this word mean? You, you need to have the security to feel okay with it. But a lot of people are of insecurities, try to demonstrate expertise and, and do it or Google not ask these people. I think that slows down the compounding growth. And I think, uh. It, it keeps you very good at adapting.

• 49:01Speaker 01

  Right? Uh, so it's funny, I was recently, GPT is my favorite thing to keep asking random questions because now I don't need to. Really worry about Google having those questions answered around because I can ask this to GPT. So I recently asked the question that. Which animals have managed to survive, which species of animals have survived for more than hundred million years without changing too much? And what is common in all of them? So GPT came up with interesting answers, which says that it's sharks, uh, uh, uh, like horseshoe crab, uh, uh, like, uh.

• 49:31Speaker 01

  Crocodiles and all of these people have survived to do this thing. So three distinct traits were one ability to reduce metabolism at will.

• 49:43Speaker 01

  Okay, it's fascinating. I can bring down my metabolism by twenty percent, like one, one is to twenty or like crazy, crazy scale that can bring the metabolism down. The second one is, by the way, a lot of in, in ancient yogis have demonstrated this as well. It comes from same yogic practice. The second thing is about, and if you think in companies context is the same, if COVID came, did you, could you do so on your metabolism and survive?

• 50:12Speaker 01

  Right? Or you burned your way out of the and disappeared. The second thing that was interesting was very high conversion rate on every attempt to secure food. Right? Uh, uh, they don't go around chasing randomly and doing things. They have a very high conversion rate, which means high judgment and the deadliest bite.

• 50:35Speaker 01

  So they will not chase many options, but if they chase something, they will have the biggest bite on it and they'll convert it. And the third thing that was more interesting one was they have survived all sorts of crazy environmental changes. Just adapting and adaptation comes from curiosity.

• 50:54Speaker 01

  Right? Uh, uh, uh, and, and you could see those people in COVID, there were two sets of people who are completely gone into shell. And they were like, who are like this curious thing. Okay. So what do I do with this? Like what happens now? Like, do I need to train something? Do I need to tweak something? So ability to change very quickly. So I often feel that curiosity is that demonstration to adapt. And learn and, and you only create more information asymmetry. To me, wealth is nothing but information asymmetry. All the best companies in the world have unfair information asymmetry.

• 51:32Speaker 01

  And, and that comes from curiosity because you're constantly collecting dots, connecting dots, collecting dots, connecting dots. And end up creating this unique edge for yourself and information asymmetry for yourself. And if you assume that I have collected enough. I mean, there's no human life is gonna be enough to connect and connect all the dots, right? We never be able to get, and sometimes I envy the stuff that you do because you're like, you are efficiently connecting and collecting dots by having luxury of all these people to talk to and you are making more dots getting connected. So your information symmetry is growing.

• 52:13Lenny Rachitsky?

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

• 52:32Speaker 01

  Nice.

• 52:32Lenny Rachitsky?

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

• 52:59Lenny Rachitsky?

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

• 53:10Speaker 01

  I often tell people that I hate the word favorite because it tells me to become limited in my mind. So I stay away from being favorite, but I learn all the time from everybody. And there are so many people to learn across the world and in history, in recent past, and every time you will discover fascinating, extraordinary things about them. So I don't think I have a person, I am this person about how did they solve this hard problem. So many of the things that we started doing recently and not very ritualistic about it so far is I ask myself and

• 53:51Speaker 01

  my key reporters every month, we go around the table and ask ourselves, what are the hardest problem we solved last month?

• 54:00Speaker 01

  And it's very hard to come up with an answer.

• 54:04Speaker 01

  And if you do this to the product leaders, like just go around and ask, what are the hard problem you solved last month? You will realize that we all stay very busy and displacement is hard. But if you notice extraordinary successful people, they'll have a lot more content to talk about every month, every quarter.

• 54:25Speaker 01

  Because they are obsessed about making that big displacement. Uh, and does not come by being busy. And that's another thing that you cannot chase the big thing. You don't see a crocodile being busy. You see a crocodile just waiting patiently at the watering hole for that best meal and have the deadliest bite for that. So the beautiful definition of predators, predators I read was the one who burns the least amount of calories to earn the most amount of calories.

• 54:59Speaker 01

  So how do you become that? And I think when I meet people who are extraordinary at that, and it comes in all shapes and forms, I learn something from them.

• 55:07Lenny Rachitsky?

  So in these meetings you have, are you judging people's success based on how many hard problems they solved? Now that they've heard this, they're going to be like, I need more.

• 55:16Speaker 01

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

• 55:24Lenny Rachitsky?

  I love that. I often, I often think of leaders as a professional firefighters or just endless fire to put out. Kind of along the lines of people and where you learn from, is there any sources of content? This is actually an audience question on Twitter. Uh, Anurag Verma asked this. What are your favorite sources of content to learn from in terms of what's happening in the world and what to pay attention to?

• 55:47Speaker 01

  I wish I could think of an answer. My method of collecting information is mostly about, I come up with conjectures in my head and then I go all over the place to find out if there are proofs. Of what I'm saying is true or not. For example, I recently came up with a conjecture that everybody who's been successful in the history of businesses or vices have historically done a lot of philanthropy to create a good image for themselves and therefore being treated as a respected citizen versus being treated as a person who did vices to make wealth. And then I asked this to G P T and I G P T came up with like fifty people who did what?

• 56:29Speaker 01

  Uh, and what were their vices? How did they change their reputation by doing lots of uh philanthropy and all of that stuff? And and then a thing happens and then I research in all sorts of directions and and I have no boundaries to if I go to chemistry or physics or uh uh human behavior to some universal principles. So my method of learning is constantly come up with conjectures from the dots that you've connected and then like absolutely work hard to find proof of it and then use that to connect to the next dot, right? So I often tell people that everything that you, every book you read makes your brain porous to read the next book. Hmm. That's the purpose of books, but that's true for every single thing we learn.

• 57:13Speaker 01

  It makes our brain more porous for the next thing that we are supposed to do. Is there a recent example of that where you got super sucked into some topic? Uh, well, it's my daily life. I get sucked into topics every now and then. Uh, uh, for example, I've been like uh thinking about second order effects of AI and what happens to countries and and jobs and and and how to expect some of these things to change, not change. Rate of change, rate of skill change. Uh, I got recently obsessed with what happens to lab grown diamonds. If they become big, does it kill diamonds? Does it make diamonds bigger? And then I looked at parallels. So pearl industry was very big before uh cultured uh uh. Pearls came and the the high status of pearls disappeared because everybody could have pearls.

• 57:59Speaker 01

  Uh uh but not too long ago, pearls was to be a very royal thing to be every prince and princesses. Uh used to have pearls around them, but as soon as it was easy to uh uh uh manufactured in a lab, it lost its value. So I think, so then should I be shorting uh or or going long on diamonds, thinking about what happens? So but there'll be a temporary period of making a lot of money on lab grown diamonds, uh which will kill. It's it will become parasitic on the status of diamonds and uh in in destroy all its profit pools.

• 58:31Lenny Rachitsky?

  You heard it here first, time to buy some diamond futures. Uh I feel like I feel like there's no one in the world chat G P T impacted more than you, considering how much you want to spend digging into random topics.

• 58:42Speaker 01

  I I often wonder, uh, Lenny, that if you took the most curious people and made their G P D searches public.

• 58:49Lenny Rachitsky?

  Hmm.

• 58:49Speaker 01

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

• 59:05Lenny Rachitsky?

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

• 59:14Speaker 01

  Whenever somebody has many choices and they make the right choice in whatever domain they have. For example, let's say you could hire anybody, but you hired great people. Or let's say you could marry anybody, but you married a great person and so on and so forth. I want to have many choices to make. How do they make choices?

• 59:35Speaker 01

  For that domain of expertise, and I think that is the most and and many times they cannot be, they'll not be able to explain how they make great choices. So you will really go in into that. Because they don't really have their mental models figured out. Uh they cannot articulate, they cannot coach, they cannot explain. But if you can figure out a way how they make great decisions in general, in in whatever domain of uh work that they are uh doing, you'll find many interesting insights coming over there. The the the other good questions to ask is about uh second order thinking. What do they think will happen uh to the world and why did they come to that conclusion? And you see their full chain of thoughts is very powerful.

• 1:00:15Speaker 01

  For example, uh second order thinking is known to be the most powerful trait to predict success of somebody, but. I often wonder what happened in childhood of people who became great at second order thinking? And that question is not fully discovered or discussed yet. Uh, and I've found some loose examples of did you play strategy games or only physical games? Has a strong correlation to building. So rigor came from physical games. But second order thinking came from playing strategy games as a kid. And if you had both, you could do really well in general because you have a discipline and second order thinking together. Uh, then, uh, did you ever have an exercise, uh,

• 1:01:00Speaker 01

  on looking at history? For example, one of the things I recommend to, uh, parents to do with their kids. I call it the wifi school is, uh, ask them a one why question every time, every meal. And let them come back with the answers next day. For example, why do humans wear jewelry? And why is, uh, uh, something in a certain way? And let them go into the full depth of history and find out, uh, uh, why, uh, why is it so expensive to advertise on Super Bowl? And so on and so forth. You just take one question and if you train them on why, they evolve at a very different rate because how, what are the questions which do not evolve at you at a much higher rate? Because why is the deep question?

• 1:01:45Speaker 01

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

• 1:02:17Lenny Rachitsky?

  I'm looking forward to a canal, uh, children's raising book, like a book to help you raise kids. This could be your future.

• 1:02:24Speaker 01

  I don't have kids, so I can run experiments on everybody else's kids. So it's a, it's a great thing to do.

• 1:02:28Lenny Rachitsky?

  I feel like with these questions, uh, I think the rule has to be you can't just ask chat GPT for the answer. If the.

• 1:02:34Speaker 01

  I think it's not bad. Uh, I think you should encourage it because we have to assume that we are going to be all co-pilots of AI now. Uh, what you have to do is derive the second order inside that, okay, this is true. Where is the similarity of this in somewhere else? Like, give me an example of this found somewhere else. And so on and so forth.

• 1:02:54Lenny Rachitsky?

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

• 1:03:12Speaker 01

  Our understanding of wealth is flawed, uh, and what wealth is, uh, to me, wealth is nothing but storage of energy, uh, and therefore the reason wealth is not zero sum because energy is. And we are just finding all ways to convert energy in our advantage. We are the only species that have managed to convert all forms of energy to our advantage. Cannadic energy and fuel and sound and solar, like no, no other species have done this. And therefore, since industrial revolution, our wealth has gone like this and continue to be like that. AI and nuclear fission and all this stuff will kind of take us right there. So I, I, I have a strong view that we will never, never have, uh,

• 1:03:53Speaker 01

  equality of wealth. Uh, in fact, chasing that is actually a bad idea. But if you let people, uh, do well and chase well, they'll have enough wealth for everybody else. Uh, and we could take a lot of people out. And I think it's complicated because we can have all this democratic arguments that, oh, the wealth is concentrated and all that stuff, but that's the physics of wealth. It'll always be concentrated. It changed these mediums, companies, countries. They're all, uh, to me, wealth is nothing but an entropy complexity, uh, that'll keep changing its form and shape. Uh, uh, you can keep fighting it or accept physics and, and take the benefit of that physics.

• 1:04:34Lenny Rachitsky?

  I think Elon had this interesting point that wealth is just a database where everyone's.

• 1:04:41Lenny Rachitsky?

  That wealth, I guess, is just in a row in the database and here's how much everyone has. And you're just transferring numbers around and that's, that's the whole.

• 1:04:48Speaker 01

  No, but the one that is important is that you can actually increase the database size infinitely.

• 1:04:54Lenny Rachitsky?

  That's true.

• 1:04:54Speaker 01

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

• 1:05:23Lenny Rachitsky?

  Wow. I love all the directions we've gone. Probably the last question, is there a story of failure in your career that would be interesting to share, something that taught you an important lesson?

• 1:05:36Speaker 01

  It's just a series of failures. I think there is no escape for anybody who's done anything in life, not failed a lot, like every day, every thing, but I, I would say that many initiatives, many products, companies that I've built have absolutely failed. Hiring that have failed, trust broken, betrayals. So I think there is no end to it, but I think entrepreneurs have the weird ability to forget about failures. And almost turn that into a lesson that you hold and you forget the story.

• 1:06:21Speaker 01

  And, and like, for example, COVID is literally no memory for me. I, I just don't remember what was COVID. It's, it's just a blank in my head right now. And I think humans are great at forgetting the, the memory of failure, but remember the lesson from failure. But I think I'm constantly learning and, and I often believe that life is too short to make all our mistakes ourselves. So we should be learning from other people's failures as well. And a lot of times we don't do that because we believe that we are special, nothing like that will happen to us. But, but as, as humans, we should be learning. I, I would say that my, my life started from a failure. My, my family went through severe financial crisis. I had to start working from age 15 and.

• 1:07:05Speaker 01

  I feel till date, I'm just trying to escape that failure that happened in the family. So I think many of us are just uh uh fighting that initial large failure that we've had and don't want to be anywhere near that one, although we are significantly far away from that. But the feeling is exactly that.

• 1:07:27Lenny Rachitsky?

  Circles back to whenever first few questions about the chips on shoulders and driving a lot of motivation. There's this phrase chips on shoulders uh drive chips in pockets.

• 1:07:39Speaker 01

  That's interesting.

• 1:07:40Lenny Rachitsky?

  Yeah, uh is there anything more you want to share about that early uh challenge you ran into? Or is that something you've shared often?

• 1:07:46Speaker 01

  No, I mean, I've shared not enough, but I I just I I should not talk about it before because I think that I would get some sympathy for that. And and I only till like recent past I speak about it because I I want people to realize that I was not some gifted kid who had some rich parents who made me extraordinarily bright and put me in great school and colleges. And I made my way through that uh uh I I I I should start talk about early because I I there's a lot of tendency to give sympathy to these people that, oh, this guy had struggled and I I I don't want to be given any credit uh uh for playing that poverty card or this card or uh uh struggling for food card like that's not an excuse.

• 1:08:31Speaker 01

  Uh uh there are so many people in the world who've done extraordinarily well because they had the gift of struggle. And I often tell people that this is the biggest curse of successful parents, that that's the only gift they'll not be able to give to their kids, the gift of struggle that they had.

• 1:08:46Lenny Rachitsky?

  Well, I think about that a lot. We have a kid. He's eight months now. And so I'm trying to figure out the balance of struggle versus making life easy and great. Uh a new challenge for me to figure out. Before we get to our very exciting lightning round, is there anything else you know you wanted to share or leave listeners with? Anything, any last nuggets of thought?

• 1:09:04Speaker 01

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

• 1:09:39Lenny Rachitsky?

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

• 1:09:45Speaker 01

  All set.

• 1:09:46Lenny Rachitsky?

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

• 1:09:52Speaker 01

  It keeps changing a lot, but my books are usually around understanding human behavior. Uh, and I keep changing based on the person, but I think it's the biggest subject. All our customers, all our investors, all our employees, all our relationships are all humans. And the subject that we are weakest on is human behavior. And how do we live this life? We are playing life on extremely hard mode if you don't learn human behavior. So I would say that's one thing. The second thing in evolutionary biology, it teaches a lot about how species evolve and how do they make decisions? And what are the core motivations that drive everybody? Uh, so that's another one I would recommend. And I, I don't make recommendations because I, I can barely finish a book to, to be honest. So I, I believe in drifting

• 1:10:37Speaker 01

  and getting deeper into topics. So understand the topics versus trying to say, uh, give me these three books and I'm going to be good. Uh, and the last one I would say is that, uh, uh, anything that can make you learn something about their journey versus their success, right? So, uh, uh, sometimes autobiographies are too celebratory in some ways, but if you can just kind of understand how they, how did they, if, if any book can teach you how people recovered from a setback in great detail is a great book to learn from.

• 1:11:11Lenny Rachitsky?

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

• 1:11:20Speaker 01

  I absolutely don't believe in reading over and over. Because I believe that we are evolving things. You might discover the same stuff coming from different books. And you will say, oh, I can categorize this in my brain again and again. But I think we should. We tend to become believers in, it becomes too religious if we repeat.

• 1:11:47Lenny Rachitsky?

  Yeah.

• 1:11:49Lenny Rachitsky?

  Next question, do you have a favorite recent movie or TV show that you've really enjoyed?

• 1:11:54Speaker 01

  I love Oppenheimer because of the struggles and Nolan's craft of making the movies. But nothing in the recent past that I feel is right of that.

• 1:12:05Lenny Rachitsky?

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

• 1:12:11Speaker 01

  I like to ask a hypothetical second order thinking question. For example, if everybody who has taken a COVID vaccine dies tonight, what happens in 12 months from now?

• 1:12:23Speaker 01

  Can you explain the world from what happens to money? What happens to law? What happens to countries? What happens to military? What happens to stock market? What happens to order of things? And I would say less than 10% of really smart people can really have good answers. So it tells you how good they are in second order thinking.

• 1:12:48Speaker 01

  But the questions can keep changing. For example, we said that what if arranged marriages were banned in India? Made got capital punishment for doing arranged marriages. What happens to the country? How do we change from there? Like some absurd scenarios, but then what happens after that?

• 1:13:05Lenny Rachitsky?

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

• 1:13:09Speaker 01

  The range of things that they could go into and think about if this happens, B happens and then C happens. Like the leaps they could make.

• 1:13:20Lenny Rachitsky?

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

• 1:13:26Speaker 01

  I think the simplest way to think about this is that being able to correctly judge the butterfly effect of an event in as close as possible. For example, okay, like a lot of people in stock market use that to say which stocks will go up and don't down like that's there's something that has happened in the market. Oh, there is a war now in Russia, then what happens to the market like can you be good at predicting that? But in everything in life, like if this happens and a lot of people hate this because it's very taxing to the brain. Brain, brain absolutely hates second order thinking unless you've trained your brain with second order thinking all the time that it looks forward to it.

• 1:14:10Speaker 01

  So you're going to convert this into a hate versus a reward cycle. And that comes with probably doing it probably early on in your life. Later on, people hate doing second order thinking.

• 1:14:22Lenny Rachitsky?

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

• 1:14:32Speaker 01

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

• 1:14:37Lenny Rachitsky?

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

• 1:14:47Speaker 01

  Yeah. The most fascinating thing that I saw was Zach talking about the utility of Meta being better than Vision Pro and their product. And, and that's exactly going to work well for Apple because when you try to make the product more utilitarian, it loses status. And, and if you study animals, you realize that the one which gets the highest mating success is the one which can demonstrate ability to waste resources and not be very efficient with resources. And therefore, people who are known to buy a product that is wasteful will actually earn higher status. And I think Zach made it actually quite easy for Apple to demonstrate their superior

• 1:15:31Speaker 01

  positioning by saying that, oh, we are not as efficient, we are not as cheap, we are not for everybody.

• 1:15:36Lenny Rachitsky?

  Wow, just continue to blow minds even on our lightning round.

• 1:15:41Lenny Rachitsky?

  Do you have a favorite life motto that you often come back to, share with friends and family, find useful in work or in life?

• 1:15:51Speaker 01

  I know it's not a favorite motto, but I think we truly are transient. And we are very lucky to have this life that we have and we have to make the most out of it. And all these struggles will mean nothing. I often tell people that wish for your life to be so great that you have collected the highest amount of content. When you are old, you have no end to the stories that you can talk about.

• 1:16:16Lenny Rachitsky?

  That reminds me of a book I once read that really had an impact on me where somebody was trying to make a movie of their life. And the producer was like, there's nothing, there's no good movie here. You have not done enough interesting things.

• 1:16:27Speaker 01

  I love it.

• 1:16:28Lenny Rachitsky?

  And so he actually became, he turned his lens into what to do in life by thinking what would make a great story. And so he just started to do, and a great story is something where you overcome challenges and achieve something you wanted. And so that became his life mottos. I'm going to try hard things and overcome them and that's going to be my life.

• 1:16:46Speaker 01

  I love it. I love it.

• 1:16:48Lenny Rachitsky?

  I'll link to that book in the show notes. Final question, you have this series on Twitter that you call Monday Motivations.

• 1:16:56Lenny Rachitsky?

  I'm curious what's motivating you these days?

• 1:16:58Speaker 01

  I find it's filled with all these people trying to give this fake motivation and make money off that stuff. And like, it's almost like a drug for people to feel, oh my God, there's motivation, I'm going to do well. I just wanted to remind people that all success comes from extraordinary amount of pain and struggle and hard work, and there is no shortcut to anything material coming in life. And so the Monday Motivation post comes as the anti-motivation post because the world is filled with. I believe that the biggest profit making scheme that I've seen in recent times is to tell people to love themselves and they'll pay you money for saying that.

• 1:17:39Speaker 01

  And I think the best way to love yourself is to keep evolving. So my motivation comes from evolution, connecting dots, solving harder problems than I have solved in the past. And I think life is ultimately a game that you want to feel that your levels have changed and your skills have changed constantly.

• 1:17:59Lenny Rachitsky?

  Kunal, you are wonderful. Thank you so much for being here. Two final questions. Where can folks find you online if they want to reach out and follow up on some of this stuff? And how can listeners be useful to you?

• 1:18:09Speaker 01

  You can find me on social media. Look for Kunal Shah. You'll find me everywhere. I usually have different personality on each social media. And in terms of being helpful, keep tagging me on interesting things that you discover that gave you that moment of, oh, my God, I did not know this. I would love that.

• 1:18:27Lenny Rachitsky?

  Amazing. Kunal, again, thank you so much for being here.

• 1:18:31Speaker 01

  Thank you so much for having me.

• 1:18:32Lenny Rachitsky?

  Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.