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

Uri Levine is the co-founder of Waze, the world’s largest community-based traffic and navigation app, acquired by Google for over $1 billion. He’s also founded nine other companies, been on the board of 20 companies, and advised more than 50 companies. He’s most recently the author of Fall in Love with the Problem, Not the Solution: A Handbook for Entrepreneurs, hailed by Steve Wozniak as the “Bible for entrepreneurs.” Uri is dedicated to creating impactful startups that solve real-world problems and has seen everything from failure to moderate success to big success. In our conversation, we dig into: • Why falling in love with the problem is key to startup success • The phases of the startup journey and how to navigate them • Why firing is more important than hiring • How Waze iterated to achieve product-market fit • Tactics for telling a compelling story when fundraising • Much more — Brought to you by: • Vanta—Automate compliance. Simplify security: https://vanta.com/lenny • Mercury—The powerful and intuitive way for ambitious companies to bank: https://mercury.com/ • LinkedIn Ads—Reach professionals and drive results for your business: https://www.linkedin.com/podlenny Find the transcript at: https://www.lennysnewsletter.com/p/lessons-from-uri-levine Where to find Uri Levine: • X: https://twitter.com/urilevine1 • LinkedIn: https://www.linkedin.com/in/uri-levine • Website: https://urilevine.com/ 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) Uri’s background (02:50) Falling in love with the problem (09:01) Signs this is a big enough problem (10:52) The importance of passion (12:04) A pivot example (13:59) Where to find startup ideas (21:55) Finding product-market fit at Waze (29:43) The different phases of a startup journey (36:45) What investors don’t want to hear (39:51) Fundraising tips (48:00) How to make your presentations stronger (50:30) A wild fundraising story (53:44) Firing and hiring (59:48) The 30-day test (01:04:10) Understanding users (01:12:08) Talking to the right users (01:15:34) Lightning round Referenced: • Fall in Love with the Problem, Not the Solution: A Handbook for Entrepreneurs: https://www.amazon.com/Fall-Love-Problem-Solution-Entrepreneurs/dp/1637741987 • Waze: https://www.waze.com/ • Ben Horowitz on LinkedIn: https://www.linkedin.com/in/behorowitz/ • Ben Horowitz quote: https://quotefancy.com/quote/1635284/Ben-Horowitz-As-a-startup-CEO-I-slept-like-a-baby-I-woke-up-every-2-hours-and-cried • Michael Jordan quote: https://www.forbes.com/quotes/11194/#:~:text=I've%20lost%20almost%20300,that%20is%20why%20I%20succeed. • Steph Curry: https://en.wikipedia.org/wiki/Stephen_Curry • How Airbnb Used Word of Mouth to Change the Travel Industry Forever: https://truested.com/story/airbnb • Space Mountain: https://en.wikipedia.org/wiki/Space_Mountain_(Disneyland) • How Netflix builds a culture of excellence | Elizabeth Stone (CTO): https://www.lennysnewsletter.com/p/how-netflix-builds-a-culture-of-excellence • Steve Wozniak on LinkedIn: https://www.linkedin.com/in/wozniaksteve/ • Uri’s post about the conference in Guatemala with Steve Wozniak: https://www.linkedin.com/posts/uri-levine_jewishnewyear-speakers-book-activity-6980089544079486976-0ADa/ • Leonardo da Vinci quote: https://www.goodreads.com/quotes/9010638-simplicity-is-the-ultimate-sophistication-when-once-you-have-tasted • Geoffrey Moore on finding your beachhead, crossing the chasm, and dominating a market: https://www.lennysnewsletter.com/p/geoffrey-moore-on-finding-your-beachhead • Nana Korobi Ya Oki: https://ikigaitribe.com/vlog/nana-korobi-ya-oki/ • That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea: https://www.amazon.com/That-Will-Never-Work-Netflix/dp/0316530204 • Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones: https://www.amazon.com/Atomic-Habits-Proven-Build-Break/dp/0735211299 • 8 Great Chess Apps for Beginners and Grand Masters: https://www.wired.com/story/best-chess-apps/ • Pontera: https://pontera.com/ 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?

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

• 0:09Speaker 01

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

• 0:20Lenny Rachitsky?

  Anything you wanted to share around the hiring and firing?

• 0:23Speaker 01

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

• 0:36Lenny Rachitsky?

  Let's actually talk about fundraising.

• 0:37Speaker 01

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

• 0:55Lenny Rachitsky?

  Today, my guest is Uri Levine. Uri is the co-founder of Waze and nine other companies. He's sold two companies for over a billion dollars. He's also been on 20 different startup boards, including a dozen he's still currently on. He's also advised over 50 founders and startups over his career. More recently, he wrote a book that summarizes all of his advice for founders called "Fall in Love with the Problem, Not the Solution: A Handbook for Entrepreneurs." In the foreword to the book, Steve Wozniak said, "This book will change your life and become your Bible if you're an entrepreneur." And I cannot disagree with that. This book is very tactical with amazing stories and walks you through the ideation phase all the way to exiting your company.

• 1:38Lenny Rachitsky?

  In my conversation with Uri, we chat about many of my favorite chapters, including why falling in love with the problem is so important, how to find product-market fit, a really clever tactic for firing people who aren't a fit for your company, a ton of really genius tactical advice for improving your fundraising pitch, and so much more. With that, I bring you Uri Levine. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously.

• 2:13Lenny Rachitsky?

  Uri, thank you so much for being here. Welcome to the podcast.

• 2:17Speaker 01

  Thank you. Happy to be here.

• 2:18Lenny Rachitsky?

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

• 2:48Speaker 01

  That sounds about right.

• 2:49Lenny Rachitsky?

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

• 3:19Speaker 01

  I'm not sure that this is a certain moment. I think that that was evolving over time and realizing that, look, at the end of the day, the entrepreneurship journey is about value creation. The simplest way to create value is solve a problem. That's the simplest way. And in my background, I am an engineer, always looking for the simplest way and and solve a problem is the simplest way. And so this is where fall in love with the problem coming from. And people occasionally would confuse the T-shirt with the book. And now the T-shirt is about 10 or even more years old and the book is only two years old. And so I was wearing those T-shirts for a long while before I wrote the book. And when I wrote the book, that was obvious that this is going to be the name of the book.

• 4:04Speaker 01

  But they are way more into that, right? So when you fall in love with the problem. Then what happened is that the problem is going to serve as the north star of your journey. And when you have a north star, you're going to make less deviation from the course. And you are way more likely to become successful. But also, the story that you are about to tell is way more compelling. Just imagine that we will be here in two thousand and seven, just before I started Waze. And I will tell you, I'm going to build an AI crowdsourced based navigation system. You're going to say, oh yeah, very interesting. But you don't care. If I will tell you, I'm going to help you to avoid traffic jams. Then you do care.

• 4:46Speaker 01

  And when your customer cares, they want you to be successful. And when they want you to be successful, they are going to help you to become successful. And so in that sense, fall in love with the problem is really a key to increase the likelihood of being successful. So in general, I, you know, all of my startups start with a problem. Think of a problem, a big problem, something that it's worth solving. Something that the world will become a better place if you solve that. And then ask yourself, so who has this problem? If you happen to be the only person on the planet with this problem, I can recommend you a therapist.

• 5:24Speaker 01

  Don't build a startup. It's way more expensive and takes way longer period of time to build a startup. But if a lot of people actually have this problem, what you really want to do next is go and speak with those people. And understand their perception of the problem. And only then start to build the solution. If you follow this path and your solution works, it's guaranteed that you're creating value. If you start with the solution, you might be building something that no one cares and that's really frustrating. So fall in love with the problem. This is where you want to start. Now, this is really hard because I'm getting tons of emails every, every week from entrepreneurs. And they're all start with what we are doing.

• 6:08Speaker 01

  And I don't really care what you're doing. What I really care about is why you are doing that. And this is the problem that you solve or the value that you create or the value that you create for me. This is what really matters, right? And so if you start your story with our company is or our system is. And in the recent year, it's everything is our AI system is or our AI company is, right? But, but generally speaking, um.

• 6:38Speaker 01

  If you start your story with that, you focus on your solution. If you start with the story with the problem we are solving is, then you focus on the problem. If your story starts with the value that we create for you is, then you focus on the user. The last two are way better than focus on the problem, the solution.

• 6:59Lenny Rachitsky?

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• 7:44Lenny Rachitsky?

  when you go to vanta.com/lenny. That's V A N T A dot com slash Lenny. This episode is brought to you by Mercury. Mercury knows your financial operations are complex. It doesn't have to be this way. I've been a super happy customer of Mercury for over a year now, and it's honestly hard to imagine a better online banking experience can exist. Most founders and finance teams have to couple together a patchwork of tools to reconcile transactions from different sources, work extra hard just to get a holistic view of cash flow and have maps to company priorities, and struggle to get answers from platforms that all speak different languages. Mercury knows that there's an art to simplifying this complex patchwork.

• 8:27Lenny Rachitsky?

  With new bill pay and accounting capabilities, you can pay bills faster, stay in control of company spend, and speed up reconciliation. The end result is the precision control and focus that startups need to transform how they operate. Apply in minutes at mercury.com and join over 200,000 ambitious startups like mine that trust Mercury to get them to perform at their best. Mercury, the art of simplified finances. Mercury is a financial technology company not a bank. Banking services provided by Choice Financial Group and Evolve Bank and Trust, members FDIC. I want to follow a couple of threads here because I imagine there's certain problems people fall in love with, amazing, I want to solve this very obscure problem for my family or a friend

• 9:12Lenny Rachitsky?

  of mine. And then they realize this is never going to be a huge venture scale business if that's a goal of theirs. You talked about like make sure enough people have this problem versus just getting a therapist that's going to help you with this problem. What are some signals and heuristics folks can use to help them understand this is a big enough problem that it's really worth their time?

• 9:29Speaker 01

  So people ask me, so you send me to speak with users, how many? And I will tell them 100. You don't need 100, but the 100 basically say you need to get out of your comfort zone. And just, it's not just your close friends and family that you need to discuss that. You need to discuss that with people that you don't know. And usually what happened is, and the validation is, is in most cases, is really clear, right? If you tell someone, this is the problem I'm going to address, and they will tell you, oh, I know someone that has this problem. It's not a real problem. But if they will tell you, no, no, no, no, no, this is not the problem. The problem is, and they will give you their description of the

• 10:10Speaker 01

  problem. This is something that you really want to follow. So if you speak with 100 people, but if you actually speak with plenty people that you don't know, you will get validated whether or not this problem is real or not. And, and look, it's not the only way to become successful, right? You start with, you look at the, you know, one of the most successful products in the world, the iPhone, right? And you ask yourself, what was exactly the problem when they started? And the answer is that there was no problem when they started, right? There were smartphones, and people were actually very happy with them. And so occasionally, we need to invent something completely new. But solving a problem is simply the simplest way to create value.

• 10:53Lenny Rachitsky?

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

• 11:20Speaker 01

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

• 12:05Lenny Rachitsky?

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

• 12:13Speaker 01

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

• 12:48Lenny Rachitsky?

  Genius.

• 12:49Speaker 01

  If you would only keep on comparing prices after that, right?

• 12:54Speaker 01

  So we started this company that is actually monitoring your own itinerary. And we realized that this is going to be huge benefits to travelers, right? And we started that as a B to C company, direct to consumers. And we realized that even though the people really care, they are not willing to take the action that is required. And we ended up with doing that for corporates. And in corporates, they, you know, they are very simple ways for them to engage that automatically. So automatically booking and so forth. And we can save corporates about 10% of the travel budget that goes directly to bottom line. So, so we started that as a B to C.

• 13:38Speaker 01

  And then we realized that this is way harder than we think it is. And we ended up with converting that into B to B, which turns out to be very successful for us. And so occasionally there are companies that you start your journey with, with one perception and you change that. And, and that will happen multiple times.

• 14:00Lenny Rachitsky?

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

• 14:30Speaker 01

  So for me, it's usually personal frustration that leads me to start to think about it, whether or not we can change it. I hate traffic jams, right? I hate those leaving money on the table, right? So there are many things that I run into and I get frustrated and I tell myself, no, no, no, there must be a different way to do that. But in general, look, the problem itself needs to start from, from you, right? Something that really bothers you, something that you care about. And then it's the validations of the problem that you speak with many people try to realize. Now, if you'll tell me, oh, this is a B to B, then speak with many businesses, right? Speak with those that you believe actually do have this problem and understand their perception.

• 15:13Speaker 01

  Once you validate that, then there are few things that you need to realize. One is, About the journey itself. This is going to be a multi-dimensional journey, right? It's going to be at least three dimensions and and maybe fourth, right? So, so the three dimensions, one is them is it's going to be a roller coaster journey with ups and downs and ups and downs. And, and look, if you'll tell me that all the businesses in the world have ups and downs, I agree, but the frequency of those when you're building a startup way higher. I think that I heard the best quote on that from Ben Horowitz. Ben Horowitz from a recent Horowitz Venture Capital firm.

• 15:56Speaker 01

  And before that, he used to be a CEO of a startup. And he was asked whether or not he was sleeping well at night. And he said, oh, yeah, slept like a baby. I woke up every two hours and cried. And that's really the reality of that. The frequency of the differences are so dramatic that there is nothing compared to that. A roller coaster journey. It's also a journey of failures. Look, we're trying to build something new that no one did before. And even though that we think that we know exactly what we are doing, we don't, so we try. We try one thing and it doesn't work. We try another thing and it doesn't work. We keep on trying different things until we find one thing that does work. Now, if you realize that this is going to be a journey of failures, then there are two immediate conclusions.

• 16:41Speaker 01

  The first one is that if you're afraid to fail, then in reality, you already failed because you're not going to try. Albert Einstein used to say that if you haven't failed that because you haven't tried new things before. If you're going to try new things, you will fail. Michael Jordan used to say that, you know, I've failed over and over and over and over again. And this is what made me successful. And so this is the first conclusion. The second conclusion is that you really want to fail fast. Just think about it, right? If you fail fast, you still have plenty of time to try another attempt and build another version of the product. Try another go-to-market approach. Try a different business model.

• 17:24Speaker 01

  So you still have plenty of time to make more and more and more attempts. And the more attempts that you have, you simply increase the likelihood of being successful. Just think that you play basketball, right? And you try to score from half court. If you have one shot and you're not Steph Curry, you are very likely to miss. But if you actually have a lot of shots, one of them you're going to make. That's it.

• 17:48Speaker 01

  Just think about it, the biggest enemy of good enough is perfect. You don't need to be perfect, you need to be good enough in order to win the market. And the way that you're going to become good enough, by the way, is really simple. You start with not good enough and you iterate and iterate and iterate until you become good enough. And then you win.

• 18:10Speaker 01

  The third dimension is that this is going to be a long journey, very long, way longer than you think it is. And the longest part of it is until you figure out product market fit.

• 18:23Speaker 01

  And product market fit goes into the different phases of building a company.

• 18:29Speaker 01

  To a certain extent, I would say, look, the difference between a corporate and a startup is that a corporate knows this is our value proposition, this is the product that we are selling, this is the pricing of this product that we are selling, this is the target audience, this is how we're going to sell them, this is how we go into the market. And we all, all we have to do is keep on executing and hopefully nothing will change over the, over the, over the period of time, right? When you start as a startup, you don't have a product. You don't know what's the business model, you don't know what, what people are going to pay you for.

• 19:04Speaker 01

  You don't know how to grow your business and you need to figure out all of those. And this is going to be a long journey. Now, the longest part is usually figuring out product market fit. And product market fit is really simple, that means that you create value to your customers. If you do not figure out product market fit, you will die, as simple as that. You've never heard of a company that did not figure out product market fit, they simply died, that's it.

• 19:34Speaker 01

  Now, once they do, and for a second, I want you to think of, you know, all the applications that you're using every day, right? From searching Google, using Waze, WhatsApp, Facebook, Netflix, Uber, whatever it is. And ask yourself, what is the difference between any of those today? And the first time that you have used that. And the answer is that there is no difference. We are searching Google today the same way that we search Google for the first time in our life. We're using Waze today the same way that we used Waze for the first time in our life. So once a company figure out product market fit, they don't change their product anymore. Because this is the value that they create to the customers and you don't want to change that. What we don't know is how long did it take them to get to this point, right?

• 20:19Speaker 01

  Beforehand, we never heard of them. And after that, they don't change that anymore. It's a matter of years.

• 20:28Speaker 01

  For Waze, it was four years. For Microsoft, it was five years. For Netflix, it was 10 years. Now, if you'll tell me, oh, today is very different. Chat GPT just started a year ago. No, they are seven years old. It took them six years until you heard about them for the first time in your life. So it does take time to create value and this is something that is really significant. Now, at the end of the day.

• 20:58Speaker 01

  Product market fit have one metric. One metric, that's it. Retention.

• 21:05Speaker 01

  That's really simple. If you create value, they will come back. If they are not coming back, that means that you are not creating value. Now, think about your episodes, right, of this podcast, right? Most of your listeners are returning, right? Because you create value for them and they are coming back.

• 21:24Lenny Rachitsky?

  100%. Every single one. Every episode.

• 21:29Speaker 01

  Occasionally, there are new ones, right?

• 21:30Lenny Rachitsky?

  And there's new ones coming all the time.

• 21:33Speaker 01

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

• 21:56Lenny Rachitsky?

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

• 22:08Speaker 01

  We started in Israel, and Israel is a small place, and we ended up with being very successful in Israel. And then we said, wait a minute, Waze crowds, we sold the data, right? Not just the traffic information and speed cams and so forth, but also the map data itself. So we can start from a blank page. And the users, while they drive, they create the map and they create traffic information and so forth. And so we figure out that we can start anywhere and we made Waze global at the end of 2009.

• 22:40Speaker 01

  And we expect that to work the same way that they did in Israel, but it didn't. It was not good enough. It was not good enough in the US. It was not good enough in Western Europe. It was not good enough in Latin America. It was not good enough in Egypt. It was not good enough anywhere that matters, right? It was actually good enough in about four places in the Czech Republic, in Slovakia, in Latvia, and Ecuador. And that's about it. Rest of the world, not good enough. So what we did is we spoke with the drivers. They wanted us to be successful. We basically said, we, the drivers, are going to fight traffic jams together. So common enemy, togetherness, all goodness, everyone wanted that to work, right?

• 23:23Speaker 01

  So people downloaded the app and it simply was not good enough. So they churned, right? Because if it's not good enough, you're not coming back.

• 23:32Speaker 01

  We spoke with them. We asked them what didn't work for them. They told us because they wanted it to work. And we built the next version addressing everything that they've told us. And we know that this is it. And it's not. So we're doing it all over again. We speak with the drivers. We ask them what didn't work for them. They tell us. Now we build the next version. And now we have the conviction that it's going to work. And it's not. Journey of failures, iteration after iteration after iteration after iteration. More than a year of iterations until beginning of 2011 that we actually started to see that working in. And then it's in multiple places, right? In the US, one metropolitan after that, right?

• 24:15Speaker 01

  Los Angeles first, and then San Francisco, and then Washington DC, and Chicago, and New York, and Atlanta, and so forth. In Europe, one country after that, Italy first, and then France, and Netherlands, and Sweden, and Spain, and one country after that. In Latin America, one country after that, Colombia first, and then Chile, and then Brazil, and then Mexico, and then rest of Latin America. In Asia, multiple countries, one after that, not all of them, by the way, not all of them. Japan is a very good example, where it didn't work, and it will never work, too. Where is crowdsourced the information, right? Which basically says that as soon as we get to the level of good enough, then we are

• 24:58Speaker 01

  good enough. House numbering plan in the US, it's really simple, right? Every block is a hundred numbers, right? And so if I have the map, I can actually count the number of blocks and take you to approximate the right location, even if I don't have exactly all the house numbers there. Most of the Western world, it's a geographical order, right? So in Israel, this is going to be sequential order. Old number on one side of the street, even number on the other side of the street, starting from one until the end of the street, and so forth. So it's enough that I will have few, that I can, few house numbers, that I can actually take you to the right place.

• 25:38Speaker 01

  In the UK, there are, you know, house number starts on one side of the street, and then on the other side, they are coming back, right? And so, so there is an order. In Japan, it's chronological order. The oldest house in the neighborhood is house number one.

• 25:54Lenny Rachitsky?

  Oh, wow.

• 25:55Speaker 01

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

• 26:17Lenny Rachitsky?

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

• 26:32Speaker 01

  That was easier for us because we tried to compare everything to Israel. So we we looked at the the frequency of use, right? Or or when our people are coming back? How how long does it take them until the next try and until the next try? And in general speaking, if you look at something that have high frequency of use, then you will be looking at the three months retentions of thirty, forty, fifty percent is actually pretty good indication. But usually what would happen is that you would know when they convert. And that's going to be after, you know, the third or the fourth time. And if they are not getting to the fourth time, then they are basically saying, OK, we give it a try. We really like this story.

• 27:16Speaker 01

  We gave it another try and it's not good enough.

• 27:20Lenny Rachitsky?

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

• 27:29Speaker 01

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

• 27:58Lenny Rachitsky?

  You got to fall in with the problem. You got to power through that. Just change the government. Just kidding. The story you told of ways and iterating is a really good example of falling in love with the problem. You're really passionate about I need to I want to solve traffic. I hate traffic. By the way, what it made me think about a little bit is Elon, when he hated traffic, he built like the boring company and built tunnels underneath underground. And your solution to hate traffic is I'm going to build ways in a soft wrap.

• 28:27Speaker 01

  So look, if I would, you know, we start ways with the vision that we are going to help people to avoid traffic jams. Now, the reality is that there are more traffic jams today than there were in two thousand and seven. Obviously, number one, I'm not done. And number two, if you ask people, what is the value of ways? Then it's not about avoiding traffic. It's about creating certainty.

• 28:53Speaker 01

  And certainty is way higher value than saving time. So you know exactly when you're going to get there. And this is a way higher value. And we, by the way, we learned that in the US market. When we spoke with people, they told us, you know, if, if I'm in, living in Cupertino and I need to drive up to San Francisco and I can take 101 or 280. I don't really want to change my route unless there is something dramatic. But what I really want to know is how long it's going to take. So I'm going to stay on the 101. I'm not going to get into service road. I'm not going to take El Camino Real. I'm not going to try something else. I'm going to stay on the 101. Just let me know how long it's going to take.

• 29:38Speaker 01

  So certainty creates way more value than, than saving time.

• 29:44Lenny Rachitsky?

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

• 30:17Speaker 01

  So, so, you know, initially you think about your new idea from a different perspective, right? This is the problem. This is how the solution is going to look like. This is what I'm going to do next year. This is my 10 years vision. This is my business model and so forth. So you think about everything, but you actually need to execute only one thing. Now, this one thing is figuring out product market fit. It's not one thing, right? You wait, wait a minute. You also need to build an organization and you want that organization to be something that you really like. And so there are a lot of operational stuff, but you need to figure out product market. As we said earlier, if you don't figure out product market fit, you will die. If you do, then you get to leave and die another day.

• 31:02Speaker 01

  And the other day is whether or not you're going to figure out how to grow your business and whether or not you're going to figure out your business model. Now, the good news is that I will tell you that if you create value, you will figure out the business model.

• 31:19Speaker 01

  At least for the people that you create value for them, they are most likely willing to pay. Now, if, in general, I'm not saying that this is the only business model that is viable. But if you create value, you will figure out a business model. But figuring out a business model is a journey by itself. And guess what? It's going to be a long roller coaster journey of failures. When we started Waze, we thought that we're going to sell map data and traffic information. And we ended up with doing advertisement, very different business model.

• 31:51Speaker 01

  Because we realized that it's not for us. It's too long sales cycles.

• 31:58Speaker 01

  We were very, you know, mobile internet dynamic company and selling to government is not exactly what we wanted to do. And so we ended up with a different business model, but with a lot of reasoning why this is the right business model for us. And figuring out growth, if I would ask a hundred people on the street, how did you hear about Waze?

• 32:21Speaker 01

  They, ninety five of them, if not ninety nine of them, will tell me, someone told me. Word of mouth, right? So everyone wants to have word of mouth. Word of mouth you can only have if you have high frequency of use. If you're doing tax returns once a year, even if you really like the experience, then once a year, you're going to tell someone else. If you are using ways every day, then every day you have an opportunity to tell someone else. So word of mouth, even though that everyone would like that, it's only going to happen if you have high frequency of use.

• 33:01Speaker 01

  So those phases requires different focus of the company, right? Initially, if you focus on product market fit, then you don't need sales. You have no product to sell. You don't need business development. You don't need even marketing. You need product. You need developers and you need product, product lead to define the product. And lead through the iterations of the product until we get to the level that it's good enough. If, once you get there, you shift gears.

• 33:33Speaker 01

  If the product doesn't change, if we search Google the same way that we search Google for the first time in our life, then the product development is now not going to be focused about value creation, it's going to be focused about either figuring out business model or figuring out scale.

• 33:50Speaker 01

  And the entire company shift gears and move to a different phase. Now, this is really hard. Just think about it. If up until now, the product development group was the only things that matters, then all of a sudden, we think about marketing now because we are now in the go to market phase, that this is the most important thing of the company. Occasionally, I found companies that have challenging and shifting gears, right? So, so they didn't figure out where the clutch is.

• 34:21Speaker 01

  And you have to, because otherwise you're stuck in the previous phase that you kind of, you know, finished that journey. This journey is nearly done. And, and you need to shift gears. And if you don't do that, then you get stuck. If you do that, if you try to do multiple things at the same time, you will fail. Focus is not about what we're doing, it's about what we are not doing. These are the hard decisions.

• 34:50Lenny Rachitsky?

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

• 35:14Speaker 01

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

• 35:40Lenny Rachitsky?

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

• 36:09Speaker 01

  High frequency refuses the simplest way for word of mouth. The other thing is coolness. If it's really cool, then you'll tell more people.

• 36:20Speaker 01

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

• 36:35Lenny Rachitsky?

  It's still actually mostly word of mouth. I think it was probably higher initially, but it's still like almost seventy, eighty percent driven by word of mouth. So it's still cool enough. Good for them. You have a couple of quotes that I wanted to share, which are along the lines of things you shared. One is just, you have this kind of, what's the most important stage at a company? They all are, but one at a time.

• 36:58Lenny Rachitsky?

  I love that line. The other is, the main thing is to keep the main thing, the main thing. The same advice you just shared, just like focus. So you're in the PM product market fit phase, focus on that. Don't think about growth yet. Don't think about business model yet necessarily. I know investors are going to push you to figure these things out and you'll have to have some story of like, here's how we might make money. Here's how we think we're going to grow, right? You need to think about that a little bit, but maybe don't make that the focus.

• 37:22Speaker 01

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

• 38:03Lenny Rachitsky?

  Yeah.

• 38:05Lenny Rachitsky?

  But investors have the final word, unfortunately, right? They decide if they want to invest or not. And so if your story is not compelling, they're gonna be like, all right, we'll find someone else.

• 38:13Speaker 01

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

• 38:33Lenny Rachitsky?

  Imagine a place where you can find all your potential customers and get your message in front of them in a cost-efficient way. If you're a B2B business, that place exists, and it's called LinkedIn. LinkedIn Ads allows you to build the right relationships, drive results, and reach your customers in a respectful environment. Two of my portfolio companies, Webflow and Census, are LinkedIn success stories. Census had a 10x increase in pipeline with a LinkedIn startup team. For Webflow, after ramping up on LinkedIn in Q4, they had the highest marketing source revenue quarter to date. With LinkedIn Ads, you'll have direct access to and can build relationships with decision-makers, including 950 million members, 180 million senior execs, and over 10 million C-level

• 39:18Lenny Rachitsky?

  executives. You'll be able to drive results with targeting and measurement tools built specifically for B2B. In tech, LinkedIn generated 2 to 5x higher return on ad spend than any other social media platforms. Audiences on LinkedIn have two times the buying power of the average web audience, and you'll work with a partner who respects the B2B world you operate in. Make B2B marketing everything it can be and get $100 credit on your next campaign. Just go to LinkedIn.com/podleni to claim your credit. That's LinkedIn.com/podleni. Terms and conditions apply. Let's actually talk about fundraising, a topic I wanted to spend a little time on. How much money have you raised for the companies that you've started total, roughly?

• 40:02Speaker 01

  So, Wade's raised about $50 million throughout the entire journey. We started by raising 12. That was the first investment round, and then we raised 30.

• 40:18Speaker 01

  Yeah, and then there was the last round that we raised, actually not a lot.

• 40:23Lenny Rachitsky?

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

• 40:27Speaker 01

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

• 40:36Lenny Rachitsky?

  Yeah, that's amazing.

• 40:37Speaker 01

  At way lower valuation, unfortunately, and end up with pretty successful results.

• 40:44Lenny Rachitsky?

  That's amazing.

• 40:45Speaker 01

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

• 41:07Lenny Rachitsky?

  It's like Space Mountain.

• 41:09Speaker 01

  Yeah, sort of. And, and, and one of the reasons is that this is a different ballgame and you don't know how to play at the beginning.

• 41:18Speaker 01

  I would say a few things about raising capital for the first time. Number one, you know, I spoke with many investors and one of the conversations that I had that they really, really resonate with me was when I spoke with one of the leading VC in Israel and asked their partner, how long does it take you to decide if you like this, you know, the entrepreneur or not? And he asked me, do you want the right answer or the real answer? So, you know, I heard the right answer so many times. Give me the real answer. And we were sitting in a small meeting room. So the guy is looking at me and then looking at the door and looking at me again and says before they sit down. Say, oh, no, no, no, say that again, right? That's the first impression.

• 42:04Speaker 01

  Now, we all have first impression.

• 42:08Speaker 01

  How long does it take you to decide if you like a candidate or not? Second, you go on a date. How long does it take you to decide if you like the date? Second, then maybe there are a few more minutes that you allow yourself to either change your mind or let that first impression solidifies. Now, if this is the case and you're looking to raise capital, start with the strongest point at the beginning, whatever it is. And I don't care if this is the size of the problem. This is the traction that you have. This is the team that you have with. I don't care what it is. Start with that because by the time you'll get there, they might be already setting up their mind. Then start with the strongest point at the beginning. And by the way, finish with that as well.

• 42:52Speaker 01

  Um, so this is the first conclusion. The second conclusion is that I spoke with uh um early stage investors, right? Those that invest the first money. So company has a story to tell. That's about it, right? No traction, nothing yet is built and so forth. And I asked him, why did you decide to invest in this company and this company and this company? And I spoke with many investors and what I heard was actually pretty consistent. I like the CEO, I like the story. That's it. I like the CEO, I like the story. Now, if this is the case, then there are two immediate conclusions. The first one is that the CEO goes along to the meeting.

• 43:33Speaker 01

  I need the headlight on me. I don't need any distractions. I don't need my team members. I don't need anything else in the room, just me.

• 43:43Speaker 01

  Because if if I bring other people, then at the end of the day, they might say, um, yeah, I like the team, but I did, I the the CEO was not specific, right? Was not unique, was not jumping out of the pages.

• 44:00Speaker 01

  So CEO goes along and tell the story. The other part is that they need to tell a good story. And good story is not about facts. It's about creating emotional engagement. It's about creating the sense that the listener would like to be part of this story.

• 44:18Speaker 01

  And for investor, it's two things. Number one is that they they want to believe that this is usable. And number two, they want to believe that you can build it.

• 44:29Speaker 01

  And this is the story that you need to tell.

• 44:33Speaker 01

  Now, I would say always start with the problem, right? Because guess what? Investors are also users. If they don't think that they're gonna use it.

• 44:44Speaker 01

  So if it's relevant for them and they don't think that they're gonna use it, they will basically dismiss that. They will basically say the market is not there. So these are two main things. The third thing is um it's a different ballgame, right? So if you have a product and you tell the story to potential customers, the right order of magnitude is that about one third of the listeners will buy.

• 45:13Speaker 01

  So in a more mature company, their pipeline is going to be three X in order to sell at the end of the year, one X. One third are going to say yes. In investors, it's 1%, not one third, 1%. So you're going to hear 100 times no until you hear one yes. And that 100 times no is something that you need to understand from the beginning. Because that's really discouraging, right? You go and speak with investors and they tell you, I call that they open up the big book of excuses, why not? But in general, they are not going to invest,

• 45:54Speaker 01

  right? Now you look at it from the other side. A venture capital partner is likely to see between 100 and 200 companies a year and invest in one or two, 1%. That's it. So if this is the case, then it's going to be the same case for you. One out of 100. If you want to increase the likelihood, learn how to tell a good story, start with the strongest point at the beginning. Remember that there are users too. So their emotional engagement is going to come through the usage, the use case, and not through how big the business is.

• 46:34Lenny Rachitsky?

  I love the summary at the end. I love that you summarized your points because I try to do that. You did my job. I love this phrase you have in your book, the dance of 100 no's.

• 46:43Speaker 01

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

• 47:16Lenny Rachitsky?

  Yeah, I look at a lot of startups too. I do a bunch of angel investing and I like, yeah, if it's not going to be a fit, I'm not, I'm not, it's just not going to work. And I could spend all this time trying to explain it to you, but nothing's going to change. Because there's other startups out there is a big part of it, right? You just want to pick the things you can do that are the best, not necessarily things that are good ideas. I really like this idea of starting with your strongest point. That's such an important tactical piece of advice. To your point, investors make decisions really quickly. And so, starting with something that really catches their attention is makes so much sense. Because once you feel like, oh wow, maybe this is a thing, your whole brain is starting to look at it from a, oh yeah, okay. Like you have a positive bent on everything you're hearing versus like, no, no, no, it's never going to work and everything is already biased.

• 48:01Speaker 01

  So I would add here another very strong advice.

• 48:07Speaker 01

  Most people are missing the most important slide of their presentation. The most important slide of your presentation is the first slide. Not the one that you think about it, the first slide, the one that says, company XYZ intro. This slide is going to be presented for the longest period of time.

• 48:28Lenny Rachitsky?

  Wow, that's a good point.

• 48:31Speaker 01

  The longest period of time in the presentation, this slide is going to be presented on the screen. And you didn't say anything there.

• 48:41Speaker 01

  This is the place that you're going to put your strongest point.

• 48:45Lenny Rachitsky?

  I love that. Is there an example of someone that did that or did you do that when you're startups? What do you put?

• 48:50Speaker 01

  I do that all the time.

• 48:52Lenny Rachitsky?

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

• 48:56Speaker 01

  Maybe size of the market. Maybe description of the problem.

• 49:03Speaker 01

  Whatever it is, right? The strongest point is there. Now, the second most important slide is the last one. Not the summary, the one that says, thank you.

• 49:15Speaker 01

  That's the time to repeat that.

• 49:19Speaker 01

  So most of their presentations will end up with, you know, thank you and my email, right? And this is going to be the last slide, right? Which makes sense. You just missed the opportunity. This is going to be the second longest displayed slide of the presentation, maybe the first.

• 49:39Lenny Rachitsky?

  Yeah, everyone's sitting there chatting, asking you questions. That's so smart. Are there any more of these tips sitting in your head to share? Because these are awesome.

• 49:48Speaker 01

  I do a lot of public speaking and usually my last slide says, one more story.

• 49:56Speaker 01

  And I decide on the story based on the audience and the dialogue so far and so forth. But I have many of stories, many last stories that I would like to tell. The important part is that no one is going to cut you off the stage. If you have just one more story.

• 50:15Speaker 01

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

• 50:26Lenny Rachitsky?

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

• 50:30Speaker 01

  Exactly.

• 50:31Lenny Rachitsky?

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

• 50:44Speaker 01

  One of the earlier startups that I was guiding was about eventually rolled into gift cards, but but in Israel, when you return something to the store, you don't get your money back. What you get is a gift card for that particular store, right? And obviously, if you return something, then it's not necessarily that you have something to buy in the store. And you ended up with having a gift card that is never being used. And and so why not sell this gift card? What happened is that I heard the story of the CEOs and I thought that the story is not good enough and I told him, "Look, you have to tell a better story." And he asked, "Can you

• 51:25Speaker 01

  give me an example?" And I said, "Yeah, just imagine that..." And then there was a long story about the microwave stopped working and I bought a new one and really long, long, long story about with the details, right? How you make a story make believe with details. The more details, people think that this is real, right? If there are no details, then this is not real. And so I told him the story that was like five minutes explaining trying to fit the microwave into the closet, then it didn't fit in, and into the cabinet, then it didn't fit in, and I had to return it to the box and so forth, and whole story.

• 52:05Speaker 01

  And then I spoke with an investor in Israel and I told him about this new company that I'm going to invest in. I told him the same story about this microwave, right? And he said, "This is interesting. I would like to meet the CEO." Then he met the CEO and CEO told him exactly the same story about the microwave. And when I tell that, they says, "My microwave, right? This is personal. This has happened to me." And so he told, the investor called me up later, he said, "This is..." You know, he told me the exactly the same story. So that was really funny.

• 52:44Speaker 01

  But at the end of the day, you, one of the things that makes story authentic is details.

• 52:54Speaker 01

  Because otherwise, it's not, right? So if you're gonna tell me, "Okay, this is the use case of the product," and you end up with explaining a use case in three lines, this is not authentic. If you watch your real users, then what happened is that you actually, and you speak with them, then you have the authenticity to tell a good story. Really, really critical. If you want to tell user story, these needs to be real, or you have to learn how to tell a story with many details.

• 53:29Lenny Rachitsky?

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

• 53:38Speaker 01

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

• 53:44Lenny Rachitsky?

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

• 53:54Speaker 01

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

• 53:57Lenny Rachitsky?

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

• 54:01Speaker 01

  Understanding users and firing and hiring.

• 54:04Lenny Rachitsky?

  Okay, firing and hiring, that was on my list. Okay, let's let's start there. And then understanding users wasn't. But I'm excited to hear what you have to say there.

• 54:14Speaker 01

  So, you know, I send the book proposal to many publisher, and there is one chapter that says firing and hiring. And many of them came back and say, oh, it should be hiring and firing. And I said, no, firing is hard decision. Hiring is easy decision. You have to first of all, learn how to make the hard decisions. Now, the inspirations for for this chapter came from

• 54:42Speaker 01

  many dialogues that I had with entrepreneurs that their startup failed and asked them why, what happened? And about half told me the team was not right. And I kept on asking, okay, what do you mean that team was not right? And what I heard the most is, you know, we had this guy not good enough, and this guy not good enough. So this is what I heard the most. And another thing that I heard quite often is that we had communication issues, right? Something that I actually called ego management issues. And then I asked them the most interesting question, when did you know that the team is not right?

• 55:13Speaker 01

  Now, the answer was actually rather scary. All of them told me within the first month.

• 55:19Speaker 01

  Then you say, wait a minute, if you knew within the first month that the team is not right, and you didn't do anything, the problem was not that the team was not right. The problem was that the CEO did not make hard decision. Making hard decisions is hard. Making easy decisions, this is why no one likes to make the hard decisions. Because you need to leave with the consequences. In a small place like a startup, the hard decisions will always go to the top. Now, if the CEO does not make that hard decisions, the result is always the same. The top performing people would leave. They would leave because they don't want to be in a place that is unable to make hard decisions, and they have a choice. The nature of the beast is different.

• 56:04Speaker 01

  Startup is a small organization. Just imagine that you're in a small organization, right? Could be a team, whatever it is, right? Ten, twenty, thirty people, and there is someone that shouldn't be there. And I don't care if that someone shouldn't be there because they are way underperforming or because they are assholes. I don't really care. They shouldn't be there. Everyone knows. Everyone knows, and the CEO doesn't do anything. That's the nature of the beast. And this is why the top performing people would leave. Now, building a startup is really, really hard, right? It's hard if you have the right team. But if you have people that shouldn't be there that are still there,

• 56:47Speaker 01

  and the top performing people are leaving, then it's going to be mission impossible. The conclusion of this chapter is really, really interesting. Right? If, if everyone knows within a month, then every time that you hire someone new, what I really want you to do is mark your calendars for thirty days down the road and ask yourself one question. Knowing what I know today, would I hire this person?

• 57:16Speaker 01

  At the end of the day, I like to nagle that into yes or no, right? Because this is where decisions are being made easily. If you ask yourself that question, if the answer is yes, then go to this person and tell them that you're really excited that they've joined, they're exceeding your expectations, and give them more equity. And you buy their loyalty for life. If the answer is no, fire them immediately. They're already set on a trajectory of not being successful. And they are creating damage to you, to the rest of the team, and to themselves, right? They deserve to be successful, but it's not going to happen here.

• 57:59Speaker 01

  They deserve to find someplace else that they can be successful. But it's not going to happen here. And that decision is really, really dramatic. Now, in many cases, with hard decisions,

• 58:13Speaker 01

  we know what is the right decisions. We're looking for confirmation. If you look for confirmation, then go and speak with the top performing people. And tell them, ask them the following, right? Assuming XYZ person is, is going to leave, how sore are you gonna feel? And you will be surprised that they are going to tell you, oh, it's not a big deal.

• 58:37Speaker 01

  This is your confirmation.

• 58:40Lenny Rachitsky?

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

• 59:00Speaker 01

  You know, one of my companies had a pretty good year, and they decided to to have annual bonuses to, by and large, to nearly all of the employees. And then I asked the CEO, so how did you end up with the list? And they said, okay, we had these people that getting, you know, was twice as much as the others, and then the others, and then there are four people that are not going to get anything. And I asked them, are they still here? They shouldn't be here, right? If they are so much underperforming, then they shouldn't be here. But generally, you need the time to ask yourself the tough questions. Because only then you can answer them, right?

• 59:45Speaker 01

  If you don't ask the tough questions, then you don't answer them.

• 59:49Lenny Rachitsky?

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

• 1:00:05Speaker 01

  By the way, I can tell you that for everything in your life, right? Everything in your life, ask yourself, knowing what you know today, would you do something different?

• 1:00:16Lenny Rachitsky?

  Wow.

• 1:00:17Speaker 01

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

• 1:00:23Lenny Rachitsky?

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

• 1:00:31Speaker 01

  Relationship in general, direction that you're going, right?

• 1:00:39Speaker 01

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

• 1:01:14Lenny Rachitsky?

  And interestingly, you make that ninety days, which kind of implies some decisions you need to wait a little bit more, you need more data, you need more time than necessarily thirty days, but set some kind of timeline.

• 1:01:24Speaker 01

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

• 1:01:28Lenny Rachitsky?

  I think the other really interesting implication here is most decisions are two-way door. Most issues and decisions you can change your mind. You can quit, you can leave a relationship. I was gonna, I was thinking you were gonna say with your five kids, thirty days after they're born, do I still want this kid thirty days with the knowing what I know now? I'm glad you didn't give it.

• 1:01:48Speaker 01

  Bad, you know, we

• 1:01:52Speaker 01

  No, this is different, right? You go into this journey of having children with the understanding that this is a long journey, right? Going to this journey of building a startup with the understanding that this is a long journey, right? The fact that it's going to be hard, okay, so it's hard. It is hard, by the way. But, but yeah, you, um, um, the, the decisions that, um, obviously they need to be relative to their duration, right? So, uh, so, so yeah, raising kids is a long journey.

• 1:02:29Lenny Rachitsky?

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

• 1:02:41Speaker 01

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

• 1:03:02Lenny Rachitsky?

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

• 1:03:09Speaker 01

  For reference?

• 1:03:10Lenny Rachitsky?

  Yeah.

• 1:03:11Speaker 01

  That's really simple. Would you hire him?

• 1:03:17Speaker 01

  Or would you hire her, right? So essentially, at the end of the day, you want to nail it into yes or no.

• 1:03:25Lenny Rachitsky?

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

• 1:03:31Speaker 01

  No, if they will tell me yes, then I would ask them, why didn't he?

• 1:03:35Speaker 01

  It's, uh, someone asked me for a reference on, on someone that I really enjoyed working with. I really think highly of them. And he asked me if they, they can schedule a call for half an hour. And I said, look, I'm traveling. I don't really have time, but if you want an email in one word, take the guy. And then he was, um, you know, trying to outsmart and, uh, ask me back. And I have that into words and I said, yeah, take the guy fast.

• 1:04:04Speaker 01

  When you know, you know, that's it.

• 1:04:06Lenny Rachitsky?

  Yeah. I like that. That's what you want to be looking for. Okay, amazing. So let's do one more chapter. The one I was gonna pick, you choose what you're more excited about is selling a company, your last chapter exit. The one you were thinking about going to is talking to users. I imagine that's much more applicable to more people, so that's probably the better choice, but your choice.

• 1:04:27Speaker 01

  Okay, then let's stick with understanding users.

• 1:04:34Speaker 01

  Steve Wozniak, co-founder of Apple, wrote the foreword to my book, and he called it "The Bible for Entrepreneurs", and when I sent him the first chapter, he said, "Wow, I wish I had that when I started."

• 1:04:48Speaker 01

  I met Steve Wozniak for the first time about ten years ago. We spoke at the same conference in Guatemala. And look, when I grew up, Steve Wozniak was my technological guru, right? So he was the most important person in my in the technology space in my mind. And then we spoke at the same conference, and we had dinner the night before. And the only thing that actually was really important for me is to have a selfie with with my idol. And so I took up my iPhone, and with the iPhone, you can take pictures by clicking here on the screen or using the volume button on the side, right?

• 1:05:34Speaker 01

  And so I took a selfie with him, holding the phone like that, and clicking on the volume button. And he said, "Finally." And I said, "Finally what?" "Finally, someone using it the way that I meant it to be."

• 1:05:50Speaker 01

  Now, you realize that there is no right or wrong. There are different people that are using different products in different ways. And occasionally, if I would have large audience, then I would ask the people, "Okay, how do you use Waze?", right? So you go to your destination, and you enter the destination, and then Waze guides you through the screen with the display of the maneuvers that needs to be made, or with the audio guidance of, you know, turn right, turn left, and so forth. If you're watching the screen, raise your hand. And then I would have about seventy percent of the people raise their hand. Then ask people to watch around them and see those people. Then ask, "If you're listening to the audio prompts, raise your hand."

• 1:06:32Speaker 01

  Then I have about twenty or thirty more percent of the people raising their hand. Then again, I send people to watch around and see those hands, right? There is no right or wrong. Different people are using it differently. Now, if you're using ways, in a certain way, up until this moment, you didn't know that there are other people that are using it differently. And to be frank, you don't care.

• 1:06:58Speaker 01

  You're getting your own value the way that you get it. Then you don't really care that there are other people that are getting it differently. But if you're building a product and you don't know that, then you're building the wrong product. You don't know that there are other people that are not like you. And you think that you're building the product for yourself, then you're making a big mistake.

• 1:07:20Speaker 01

  And the way to figure it out is, by the way, two things. Number one, watch new users. Simply watch users and see what they're doing. And number two, if they are not doing what you expect them to do, then ask them why.

• 1:07:34Speaker 01

  Because this why is the one that is going to make your product successful. You understand the why, and the next version, you're going to address that. Now, this is in particular, when it comes to understanding users.

• 1:07:48Speaker 01

  Obviously, there are a lot of users, but we can group them into several groups of their ability to adapt something new. Something new is not necessarily new technology, right? We think about it as a new technology, but it's not necessarily about technology. It's about new behavior.

• 1:08:07Speaker 01

  And then we look at the entire population, and every time that we look into large numbers, they will have normal distribution, right? So the bell curve of the distribution. And then we will have about two percent of the populations that are the innovatives. The innovatives are going to use something new because it's new.

• 1:08:25Speaker 01

  That's it. They care about this subject, and they're going to be the first one to hear about it. And they are going to try that out because it's new.

• 1:08:34Speaker 01

  The second group is usually what we will get to see as the first users are the early adopters. As soon as they realize that there is value, they're going to give it a try.

• 1:08:47Speaker 01

  And if there is value, then they will keep on using it. And if there is no value, then they will, then they will quit.

• 1:08:55Speaker 01

  The third group is the most important group. This is where market leaders are, right? This is called the early majority. This is about one-third of the population. And the one that wins the early majority wins the market. The challenge with those group, with the people in this group, is that they are afraid of change. So their state of mind is, don't rock the boat. Whatever I'm currently doing is good enough for me. So if you have Salesforce.com, which is absolutely amazing, their reaction is going to be, what's wrong with Excel?

• 1:09:30Speaker 01

  And because they're afraid of change, they are not going to try something new. Now, the reason is that, at the end of the day, they're afraid that this is going to be too complex for them, and they will not get it. And they don't want to be embarrassed, and they don't want to feel like idiots. And, you know, guess what? People don't like to feel like idiots. And so they are not going to try.

• 1:09:55Speaker 01

  And you need to see those people to understand their barriers for starting to use your service. And by the way, the solution is always the same: simplicity.

• 1:10:07Speaker 01

  Leonardo da Vinci said that simplicity is the ultimate sophistication.

• 1:10:14Speaker 01

  If you want to make it simple, in your journey of building a product, we basically say, this is iterations and iterations and iterations. In many of those, you add features, and you add features, and you add features, until you, all of a sudden, you add the features that people are using. What you really want to do next is remove the rest of the features that people are not using, because they are adding complexity.

• 1:10:38Speaker 01

  Now, most of the product owners, they are either innovators or early adopters. You cannot understand an early majority person. If you belong to one group, you cannot understand a person from that group unless you watch them and ask.

• 1:10:58Speaker 01

  So the most important part of understanding users is actually seeing those users and they are not wrong.

• 1:11:06Speaker 01

  This is how they behave.

• 1:11:09Lenny Rachitsky?

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

• 1:11:41Speaker 01

  The early majority.

• 1:11:42Lenny Rachitsky?

  Early majority.

• 1:11:43Speaker 01

  Late majority will never use the product. They will use your product only if they have to.

• 1:11:47Lenny Rachitsky?

  Yeah, the laggards, I think he calls it. They look for basically reference, references, people telling them, hey, you really need to use this. A lot of people just like, basically word of mouth is the way you described it.

• 1:11:57Speaker 01

  Not, not just word of mouth, even occasionally some, someone to show them how to use it.

• 1:12:03Lenny Rachitsky?

  Yeah, that makes sense. Just like here, check out ways, here's how it works. Yeah, that makes a lot of sense. Okay, amazing. Is there anything else along those lines as you're talking to customers and understanding what you're looking for that you want to share?

• 1:12:16Speaker 01

  You know, occasionally we, we, what happened is that we speak with the wrong customers.

• 1:12:23Speaker 01

  Right? So just imagine that we have what I call funnel of use, right? So on top of the funnel, we have people that are download that, let's say, or, or have, you know, entered our website, right? And then the next phase is that they registered and the next phase that they're trying to use it for the first time. And then the next phase is that they're getting the value and they're coming back, right? In this funnel, what we usually try to do is speak with the users at the bottom of the funnel, those that were successful. But in order to improve, we need to speak with those that fail. Those that were unsuccessful, those that did not register, or they did register and did not use, or they did use and did not come back.

• 1:13:07Speaker 01

  Because they know something that we really need to know, why? This why is what makes a great product.

• 1:13:19Lenny Rachitsky?

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

• 1:13:33Speaker 01

  Yep.

• 1:13:34Lenny Rachitsky?

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

• 1:14:04Speaker 01

  So, so number one, I reserve the ride for my biggest failure yet to come. And, and look, I keep on trying new things, right? I keep on doing things. And so eventually I will fail as much as, maybe I, maybe I'm more successful statistically than, than arrows, but I will fail. And this is very, very important part to realize, don't be afraid to fail. In your journey, you're going to fail multiple times. And when you fail and get up, you get up stronger. This is maybe something that I will tell all the parents in the world. The biggest advice that I can give you is teach your children to fail.

• 1:14:49Speaker 01

  Because when they get up, they get up stronger. And when they know that, they will get out of their comfort zone. And they will eventually discover what makes them happy. And at the end of the day, as parents, there's only one thing that we really like. We want our kids to be happy in their own way. We don't know what it is. They don't know what it is. We want them to explore, and they will only explore if they are not afraid to fail.

• 1:15:18Lenny Rachitsky?

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

• 1:15:27Speaker 01

  Let them fall. There is a Japanese saying, uh, fall seven times and get up eight.

• 1:15:35Lenny Rachitsky?

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

• 1:15:43Speaker 01

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

• 1:15:45Lenny Rachitsky?

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

• 1:15:50Speaker 01

  Yep.

• 1:15:51Lenny Rachitsky?

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

• 1:15:58Speaker 01

  Mark Randolph of Netflix, uh, That Will Never Work, right? And, and by the way, it's funny, Mark Randolph, uh, wrote endorsement to my book and, uh, I reached out to him, um, because I read someplace that, uh,

• 1:16:14Speaker 01

  that he's answering all of his emails and I reached, I sent him an email and said, look, we have at least three things in common.

• 1:16:22Speaker 01

  Number one, I do answer all of my emails as well. Number two, I'm using your product, you are using mine. And number three, I heard more time That Will Never Work than you did. And, and I think that understanding this journey is really, really important. So this is definitely a book that I will, uh, I would recommend. Atomic Habits.

• 1:16:46Speaker 01

  Getting habits and improving them, measuring and improving is really, really important.

• 1:16:55Lenny Rachitsky?

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

• 1:17:02Speaker 01

  I don't watch a lot.

• 1:17:05Lenny Rachitsky?

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

• 1:17:11Speaker 01

  So I can bet that most of the people say the chat G P T, but but actually, no, I recently downloaded the chess app. And I returned to play chess with the computer or something that I haven't done for so many years, and I really enjoyed it.

• 1:17:30Lenny Rachitsky?

  Amazing. It's actually, I don't think chat G P T has ever been recommended. Recent choices have been a beautiful Persian rug, a Rivian, a very nice Mercedes. And like, I think recently it was a course on a nervous system, a regulation.

• 1:17:48Speaker 01

  Cool.

• 1:17:49Lenny Rachitsky?

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

• 1:18:02Speaker 01

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

• 1:18:09Lenny Rachitsky?

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

• 1:18:21Speaker 01

  I'm probably will never be done.

• 1:18:25Speaker 01

  I have, you know, ten different startups in multiple areas. One of them, Ponteira helps people to retire richer, which is one of the biggest challenges in, in the world in general, but also in the U S. If I would ask a hundred people on the street that have four one K plans, what is your four one K plan invested at?

• 1:18:50Speaker 01

  Ninety-five percent of them will tell me, I don't know. I do know, by the way, in the default. Whatever was the default when they joined, right? Now, obviously, if you didn't do anything and you think it's right, no, it's not right. It's probably simply not enough.

• 1:19:08Speaker 01

  So this is a big problem. I have one in the medical space that is trying to create.

• 1:19:15Speaker 01

  I would call that the. AI of the medical knowledge, so trying to improve doctors and in particular in clinical decisions. That is going to change the world, but if you would ask me, then I will give you some examples, right? So so mobility is still a problem, right? You look at many areas in our lifetime and mobility is still every year. It's instead of getting better, it's getting lesser. So mobility is still a problem.

• 1:19:44Speaker 01

  And

• 1:19:47Speaker 01

  medical services, right?

• 1:19:50Speaker 01

  US medical services are five to 10 times more expensive than they are in Germany. Now, it's not that they're better, they're simply more expensive. So obviously you ask yourself, okay, where is this inefficiency? Where is it? But a lot of places of inefficiency in the medical services if they are so so expensive.

• 1:20:12Speaker 01

  Education, okay, anything that I will tell you that we are still doing the same way that our parents did. It's probably something that we need to revisit.

• 1:20:22Lenny Rachitsky?

  I feel like I nerd sniped you with falling level problems. Clearly fallen with a lot of problems you want to solve, solve them all. You're addicted to startups.

• 1:20:29Speaker 01

  The good news is that there are a lot of problems and the bad news is that there are a lot of problems.

• 1:20:34Lenny Rachitsky?

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

• 1:20:56Speaker 01

  So, um, obviously this is the book, uh, Amazon, Barnes and Nobles. Um, there are basically places that you can find it. Um, you can follow me on LinkedIn. Um, this is pretty much the only, um, the only network that I'm actually engaged. Uh, if you read the book, then you will find my emails in the book and then you can email me as well. I, um, and I do answer all of my emails. You know, I want you to read the book. I don't want you to buy the book. I want you to read the book. And the reason is that I have a purpose in life and this is creating value. And I believe that this book is going to be the best return on investment that you ever made.

• 1:21:41Speaker 01

  Not the twenty or thirty dollars that it costs, but the time that you're going to spend on writing it. And therefore, I can be valuable for you. And if I can be valuable for you, then I serve my purpose.

• 1:21:53Lenny Rachitsky?

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

• 1:22:05Speaker 01

  Thank you.

• 1:22:06Lenny Rachitsky?

  Bye, everyone.

• 1:22:08Lenny Rachitsky?

  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.