Lenny Rachitsky: evaluation

Transcript context

…Yes, and so initially, I think... And of course you and I are both playing, let's be clear, we're playing a software game. For example, I was trying to apply this framework to Intel, and Intel said to me, "Geoffrey, you do understand that a prototype product in our industry costs about $500 million." Okay, okay, okay, okay. Maybe that's not the same model. I think in our world right now with digital transformation, most entrepreneurs are doing some software led play, which means you can work with a small team. So I think what I would advise is I would do projects. Even though I have a product vision, I would start with trying to make as much projects, which would be very customer led. And frankly, initially, even if I have a roadmap, the customer's probably going to take me off my roadmap a bit. I'd have to be willing to say, "I'm going to open the aperture enough." Because I just need to get enough experience with the technology. I need to put in people's hands. If it's a freemium play, you can do it for free. But that tends to be more of a consumer play. There are exceptions. There are B2B companies like Atlassian and things that did start as a freemium play, but that's not as normal. I would think more of the consultative play to do that. But what I would try to do, so I would try to get to cashflow break even on my own money with no venture capital. The only reason you need venture capital is if... Well, two things. Either A, the technology is too expensive and you cannot self-fund it, GPUs a bunch of that, training large language modules, those kinds of things. Or this thing is going to catch fire too soon and I don't have time to dither around for two or three years. So those are two reasons to go to venture capital, but just because you want to do a startup doesn't mean you need venture capital. We had Jason Fried on recently the CO of Basecamp, and he made that point in many different ways. The benefits of not raising and how most VC funded companies do not work out, and even though they do, you often don't make as much as you could if you tried it to bootstrap it. So I think there's a lot of resonance there. And you have this quote that essentially kind of what you just said, that with a single round of funding, you should be able to cross the chasm and dominate a single use case in a single market within 18 to 24 months. Yeah. This is like an English major doing math, so be careful because I am an English major. But in general, because again, I said it's not expensive, and by the way, you're not discounting. In other words, you're actually using value pricing because the problem you're solving is severe enough, the customer doesn't want a discount, the customer wants you to... It is like if you have to have heart surgery, you don't want a coupon that says, "Heart surgery 9.99 this Saturday only." You want to go to the Mayo Clinic or you want to go to wherever, so you don't have to discount. What you do have to do is you have to make almost like a guaranteed commitment to the problem to solve. We're going to take this problem off the table and we're not leaving until you're satisfied. That's the key to the game. That's a little bit weird because if you've invented ChatGPT, and now you're saying, "But I am going to solve the third grade math problem," which is a real problem. But ChatGPT can do anything. I know, but we're going to solve the third grade math problem. That's hard for a lot of entrepreneurs to get their head around.…

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