Subscribe
Share
Share
Embed
The "No BS" version of how startups are really built, taught by actual startup Founders who have lived through all of it. Hosts Wil Schroter and Ryan Rutan talk candidly about the intense struggles Founders face both personally and professionally as they try to turn their idea into something that will change the world.
Welcome back to their episode of the startup therapy podcast. This is Ryan Rutan joined as always by my friend, the founder and CEO of startups. com will Schroeder. You and I have been in the startup game pretty much since the startup game existed and from those earliest days until now We've been an era that said scale grow head count make it bigger go faster And now we're suddenly Entering this sort of new age Where small might be the new big and that scaling your head count isn't going to be as much of a thing as just scaling your output, scaling your efficiencies and doing things under a new new methodology, largely driven by AI, but there are other things that play there as well, like remote work, but I think today's focus is probably going to be more around AI, but from your side yeah.
having come through this entire thing. Are you going to miss the golden age of startups where it was about packing as many desks into an open plan office as you could and hiring as many people as you could and all that. Are you going to miss those days?
I'm going to miss it so much. I'm going to miss staying awake at three in the morning every night, wondering if I'm going to be able to make a massive payroll.
Yeah. I'm going to miss having to kiss the ass of investors to raise tens of millions of dollars so that I could get done what I actually wanted to get done.
Yeah.
I'm going to miss having to sign 10 year leases on buildings that I never wanted to go to with tons of people that I don't even really know.
I'm going to miss all that. I'm going to, it hurts you efficiency. Oh man. Yeah. It's an interesting time, right? And I think we're going to look back at at this era where people used to an oldie tiny days. It was just funny. It's like people coming up first time. Now you're 23 years old.
You're listening to this podcast. You're listening to what we're doing and realize that you are in a moment of time that is going to look and feel. The way we see stock photos or stock footage from like the sixties and the fifties, where there are huge typing pools all of all women back in the day.
Of people like producing documents and you're like, wait. You had all those people just to type documents?
Yeah, and for the 23 year olds so one of the reasons you had that many people and despite, we were actually using all 10 of our fingers to type and not just our thumbs. But it still took, inordinate amounts of time to create documents.
Yeah, no, it's incredible. And so I think we're gonna have a snapshot. And then the reason I'm saying this for younger folks, because they haven't seen these kinds of changes before. And we'll talk about how we've actually been through this before. But what's changing so quickly, and I'm so glad we're covering this.
Is for the first time in really forever. Startups have the ability to start replacing thousands of people that would otherwise be in a huge job. Now there's a lot of pushback to that. And I think it's misplaced by the way, which is, Oh, AI is taking jobs. Jobs are coming away. We did a whole episode on this.
No, they're not. They're creating a hundred more jobs that haven't existed yet. And if you're not sure, pick up your phone, look at every single app that's on your phone. None of those existed before that's happened and around forever. They all get invented like 15 years ago, right? This is how things work.
AI will create an entire new layer of jobs and opportunities, et cetera. And what's going to be so powerful for founders. Is more people will get the, we'll get access to do more things. Let me give you one more example, right? Just as I'm ranting here right now. Think of how many people don't have access to capital.
Okay. So we talk about it from all over all corners of the world. That would be most of
them for everyone listening. It's most of them. What if he didn't need it? That's exactly what if you didn't need it? What does that mean? Again, we have examples of this in recent history, right? You remember when you and I started starting internet companies?
Remember the costs involved? Bananas, server space getting anything coded. If you weren't doing it yourself, like it was all like wildly expensive. You need 10 million to show up with risk. That's it. You had to have so much money just to get started. And, I want to marry this to the ethical question around, around AI taking jobs, by the way, because I think there's a whole thing there that tends to piss me off when I hear people get up in arms about this.
Just that cost reduction alone has allowed so many more people to start companies. Why do you think there was this massive startup boom? You think all of a sudden it just became more popular? Yeah, it became more popular, but it still cost ten million dollars. Guess what? There wouldn't be very many people doing it.
What those cost reductions did was turn it from being, you gotta be NBA level to play, to everybody can join the rec league and try to figure shit out because it's not cost prohibitive. At the same time, As you're going through that and you have a 10 million need, you have to hire a giant staffing line just to try to figure out your startup.
Imagine the risk involved in that. Look no further than last year's layoffs. After we saw these massive IPOs, these massive investment tranches that were coming through post pandemic. And then what happened? All of a sudden we see 10, 000 people getting laid off. Where's the ethical question in that, right?
So it's not as if AI is doing something different than big businesses are already doing. It's just doing it in a slightly different way. But, as you pointed out, with the opportunity to create new stuff as opposed to just cutting headcounts.
You bet, and I think we're at a point now. Where it's starting to become real.
We're at that, that just before the waves about to crest moment, where everyone hears it coming, and obviously, the press has been going nuts with AI. I would argue that most founders that I talk to still don't quite understand what's happening. They hear there's this amorphous thing called AI.
And they're like, okay, it's somehow getting applied to everything.
They're calling all their other friends on their flip phones while watching somebody use an iPhone. It's ah, this is going to catch on. I see it, but I don't really believe it.
If you don't see it, it's because you're not using it.
Like I am neck deep in this stuff. And every day I'm like, you've got to be kidding me. Like no matter how many times, I use it, how many use cases I apply. I'm like, Jesus, like every time I think it was like maybe 10 percent on the way. It's a hundred thousand percent on the way. I can't believe this is V1 and this isn't me trying to sell AI.
I got nothing to sell. Honestly, whether you use it or not, I don't care. However, it's happening. It's happening whether you like it or not. And it is happening at
a scale and a speed. You can't fathom it. That's it. That's it. So we've seen it change already just in, in two years of kind of mass adoption.
Not even mass adoption, the level of adoption that we're at right now, it's moved very quickly. Things have changed so fast. And that will just continue to accelerate. We're sitting on 386 versions of these things at this point, right? We will hit Pentium sometime soon, and then it will just continue to go until we're at M2 or whatever the hell we're using now, chip wise, right?
It will continue to accelerate and become more useful.
Cause I'm a video game nerd. What I always tell people is if you know far back enough, this is as if the Atari 2600. Was the Xbox series S, from today was the first version, right? Like it was, we are light years ahead, even on the first version, obviously, we've given AI, let's just talk about a couple of use cases again.
And this is for folks that are listening, that have heard of AI. They don't quite get it. I want to just give you a, I want to start off with a couple of small use cases. So you can understand why this is so geometrically different than what we've had and how it affects staffing because this whole thing is about staying small.
Let's first talk about small. Let's talk about a call center right now, a call center, which is like the epitome of headcount.
It's the typing pool of 2024
is set up. Cause it does two things. It creates a user interface with people who are calling in obviously human. And it creates a knowledge base of trying to figure out some transaction, both of those can be completely automated talking to a human assumes that you just need an interface to, to interact with that understands what you have to say.
I don't know how mind blowing the people on customer service are, for who you call, but I would venture to say we could probably do better, right? But I would argue the people on the phone or the customer service reps would probably feel the same way. The other side is the knowledge. Having a pool of a thousand people with roughly the same knowledge that all had to be trained up is a huge waste of time and resources, right?
When you could have one essential AI that just does it a hundred times faster. Which, by the way, with 24 7 service and no hold times. No upside to having tons of people. Okay. So let's, one use case, I'm just gonna use call centers, right? Let me go to the other side, which people talk about a little bit less.
Engineers, people who write code, the Holy grail. I can go into one of a million chat, GBT, like variants right now and write almost any code I could possibly want. And I don't know anything about coding.
Yeah. I've coded some pretty amazing stuff in the last few months. The last time I really coded anything that I would show anyone, Was probably 2001.
2002.
Yeah. I was writing server site Includes and I, yep. . It's, yeah, it's yes. Okay. This is starting to get beyond me, but, okay. So I can now code in, in, in the new versions you're seeing now of like site builders, et cetera, are allowing you to use actual prompts in create an entire site.
Meaning that the job of, I have to hire engineers to write code. Is going away, ironically, with engineers helping you write that code. And all of these things that we spent lots of money, to quote, staff up for, are going away. And I don't think people understand how fast this is happening, or what the overall impact is, and that's it, what we can talk about today.
is why the game's changing and why you should care.
Yeah, I think it's super important. So I want to talk about, again, to carry on to the point you're making here around reducing staff. So you're talking about we can take what was a thousand person call center and take that down to maybe One, 10, 15, 20 people, right?
There's something that goes. So I think when we think of it from a startup perspective, where we're starting from zero, we don't have a thousand people reduced down to one. Where it gets really interesting is looking at how you can take those small resources and just provide so much more. It's a staff multiplier.
It's a force multiplier. It may fully replace staff in some cases, but there's all these really interesting use cases for things that just otherwise never would have existed. I think everybody knows that we'll use Netflix as an example. Netflix has been using. Some version of AI and algorithm to help with the recommendation engine for some time now, right?
What you might not know is that Netflix is using AI to produce Thousands of trailers in some cases for a single piece of content Because it's tailored to the user and what they think that user wants to see to motivate them to watch that. Here's the thing that didn't take away any jobs, right? It did not, because there was no version of Netflix saying, let's hire enough people to make a thousand trailers for this week's episode of Dora the Explorer, right?
It wasn't going to happen, but it creates a better user experience for us. It creates stickiness for Netflix which ultimately creates revenue jobs, all that stuff that we do want to see happening. And so I think that we have to be really careful. About assuming that, by just by reducing head count, that's really the only objective here.
It's not right. I think we'll get to that, but it's about how much more can we provide, right? There are so many things I know you're in the same boat. There's so many things that I have done for so long. That now I do in 1 20th of the time or 1 percent of the time or I just don't even have to do anymore because I've replaced it with some sort of automated routine, which is amazing because I can focus on the shit that I really need to be doing.
I'm really good at. I know everybody theoretically hypothetically gets this. In terms of what the power of this thing is but I think we're still like people are thinking about how we apply it to an individual level as opposed to how do we apply it as a startup methodology and how is this really going to change the game around how companies are built.
I think people are missing the output of this as well. Yes. Making things cheaper. Yep. Here's the analogy I'd give you, right? Being a carpenter myself. Let's say back in the day, Ryan, you and I were on the job site of building a house, right? And power tools hadn't existed yet. Okay, and we're still sitting with our oldie timey giant saw going back and forth, right?
And it takes us as a crew about a year and a half to build a single family dwelling, right? But that's just how long it takes and it employs all of us, etc. And then some idiot shows up with a power saw like a circular saw or a drill, literally any power tool. And we're like whoa, whoa, circular saw guy, you're gonna take away my job because Ryan and I are We spend two weeks cutting 14 two by fours, and
that's important,
and you're gonna do that.
it takes that long. Yeah, exactly. Yeah, and you're gonna do that like in ten minutes, and you're taking jobs. No, you're missing the point. It shouldn't take this long to build a goddamn house. It should take three months, right? And guess what happens when you can build a house in three months that used to take a year and a half?
It makes houses cheaper. No, that means more people can afford houses, right? Less people are living in apartments or villages. More people are living in houses because you've brought the cost down. If you don't have to pay for a thousand people to run customer support, think of how much cheaper you can make goods and services, think of how many more people can now get those goods and services.
Think people only see one part of the equation. They're missing the rest. Zoom out for a second and say, okay, cool. That's interesting. So you're saying that I could maybe get into industries that could have been wildly cost prohibitive because they required thousand person call centers, they required 50 engineers, and Ryan and I can just do this ourselves and hire maybe two people for the same output?
Oh, that's cool. Then we can take a shirt that used to sell for 75 and sell it for 7. Cause we don't have any of those associated costs. Yeah, that's the point. Think of the power of that. Something that's really funny about everything we talk about here is that none of it is new.
Everything you're dealing with right now has been done a thousand times before you, which means the answer already exists. You may just not know it, but that's okay. That's what we're here to do. We talk about this stuff on the show, but we actually solve these problems all day long at groups.
startups. com. So if any of this sounds familiar, stop guessing about what to do. Let us just give you the answers to the test and be done with it.
I think one of the things that I keep hearing, it's the fears of people is that this ends up becoming like there's a few players that take all. I would rail against that with my last breath, because I think what ends up actually happening, we talk about things like mass customization. Now, because it's easier and cheaper to build, you don't have to get to a hundred million dollar company to make your bets pan out in a way that it works.
I see industries becoming far more fragmented, not more consolidated as a result of this in really good ways, right? Fragmented in the sense that instead of having, a single provider That does everything for every industry segment. You have a provider per industry segment per niche, because you can now afford to do that.
You can build something as small for as small of a market as you want to, because you don't have all of these sunk costs overcome. In the long term financial success in business, which ultimately changes, right? I love seeing entrepreneurs who got and tackle like some really specific and tiny problem because they can now, because we can reach that audience by the internet.
The challenge still exists in, can I get to the point where I've built what I need to satisfy that market within a cost structure that ultimately allows me to pay myself back my investors or when I won't have investors anymore now with AI and the speed and efficiency with which we can do these things.
It means that a single person can start a business that services 1, 000 people, makes a great income for that founder, particularly if they have no employees or very few employees and very little cost, and we can just see a much greater diversity of business ownership as opposed to the necessitous consolidation of that revenue under big brands, big umbrellas, because that's what it takes to pay yourself back.
Let me give a real world example that you're going to remember. This was again, host. com bust coming out of the. com bust. Was the emergence of a company called match. com, right? A juggernaut to their credit in the dating space, host. com crash. A couple of maybe the most important things in the startup world happen simultaneously.
Cloud computing started to become a thing, or at least shared hosting where you didn't have to have like literally your own server room to do something, right? Not an insignificant cost. Run downtown, unplug that thing, it's not working. Exactly, right? The cost of bandwidth, where a consumer connection became tens of dollars.
Where it used to be, remember the T1 line? You'd have to get a T1 line that would cost you thousands of dollars a month just to like literally connect more than five people to the friggin internet. That came down. Infrastructure started to plummet, okay? Very important, because that prevented an awful lot of people from ever even getting a step in it.
What I would argue is the most important part of that era. This is like the early two thousands, the most, the biggest change that blew people's minds without realizing in time. Was advertised for the first time performance based advertising was introduced. What we know now is cost per click.
What we know now is affiliate fees. The early entrance in that field overture, which ended up getting bought by Yahoo and stolen from Google for a commission junction, remember like back in the day, or, the CJ legs back then these guys. Fundamentally changed the trajectory of all startups because for the first time you could start with a tiny budget and grow it up.
Now people will think twice about it, but that was unheard of
at the time. It was a fundamental change, right? Because it allowed you to reach just the people you need to reach. You didn't have to have, a million dollar ad budget to get in a magazine to reach the 25 people you needed to read out or reach out of there.
That might work. It was such a huge change and it made me so happy to see because it allowed people to say, it doesn't matter how big the ID, it matters how much I care about it, whether I want to go solve it. And I think we got a long way towards that with, the post. com bus and all the things that you just described.
But I think that AI is going to be the thing that carries that the rest of the way home and really allows people to build something meaningful for them, for the audience they want to serve without having to take into account that they're going to need to go raise millions of dollars and put all of this risk by, again, by the way, like most of the shit fails.
I don't want to, I don't, we can't leave that aside. It's you're taking away all these potential jobs, all those potential jobs. It would have been created and then lost anyways because the startup company would have failed, right? So I think that we cannot take the failure curve out of this equation while we're examining all of this holistically, particularly while questioning the ethics of all this stuff.
Okay. So let's build on that. If you looked at a pitch deck, pitching to investors circa like 1999 and you looked at use of funds, the pie chart. A massive amount of that would have been in advertising and infrastructure less so in staffing as a relative measure. Now, if you fast forward, now you go to mid 2000s, right?
And you're saying what's that pie chart look like post post servers going down, et cetera? All of a sudden over the years, and we see this firsthand, cause we see tens of thousands of pitch decks that pie chart now almost always looks like this, the funding side in almost every pitch deck, the pie chart is 80 percent people essentially, and then 20 percent marketing and random shit.
The reason I say that is because now we're looking at it going, Hey, That biggest piece of the pie chart, the whole reason you're raising at all, is about to get eviscerated. And that is great news, everyone. Right now, if I were to try to, if you and I were to try to build Startups. com, let's say, in the 90s, and I were to say, what's a reasonable amount of money that we need to raise in order to get things kicked off, I would say initially, probably around 20 million dollars.
Given what hosting was, given what it cost to just build a damn web page back then, 20 million dollars was pretty reasonable. I would say if we fast forward into the 2000s, even almost up until recently, because not a lot changed other than social and mobile. Which are meaningful I would say at about 5 million, give or take, okay?
With where we're at now, it's not inconceivable that we could be sub 1 million dollars of what used to be a 20 million dollar round, right? We need to keep a handful of people fed, and we're good. And we're
good, right? I think one of the really interesting things we're gonna see I'm, I don't have a direct prediction here, but we have watched seed rounds, pre seed rounds, all of these, we've watched them just exponentially grow in size year after year.
I think we're going to see, I think we're going to see that change. I think we're going to see a regression. To significantly smaller rounds or a lot more companies going, you know what? Like bootstrapping just makes all the sense in the world. Get to where you need to be, or you can at least get a hell of a lot farther.
Before, because again if 80%, 90 percent of what you were doing was related to staffing. Then you take that off the table, you have so much less to raise. All of a sudden it becomes an amexable raise again, right? You can just I will just put this shit on my credit cards, right? You can't put 20 million on a credit card.
You can't even put a million on a credit card. You can put 25, to get you to a reasonable point to imagine how much easier, faster, cheaper people are going to get to product market fit now. Which is where so much of the risk is tied up. It's going to be absolutely bananas.
Sure. Going back to my, my my story about match.
com match. com comes out of the earlier variant, which is the 20 million plus variant. And it was way more than that. I, and they built a good company but again, they were very early in the economy. This idiot out of frigging Canada shows up Marcus friend. Do you remember him? Plenty of fish. And when I say, I'm kidding, I actually, I'm not knocking the guy. I loved this guy, right? Because he was one of the early beneficiaries of AdWords, of AdSense. AdSense more specifically. Marcus creates a one man show called Plenty of Fish and does something unheard of at the time. He makes it free.
He makes a dating site that's free, right? And it goes bananas, right? It scales so fast, okay? He becomes a major competitor to places like Match. com. And what I loved about this guy, in a really short period of time, in a very short period of time, here's what I loved about this guy, and by all means, look him up, look up Plenty of Fish, whatever he used, I'll never forget this back when people started blogging, He used to post photos of his AdSense checks as thumbing his nose to his competitors, right?
He's by the way, I'm one person in a room, I have no customer support, I have no marketing team, he would brag about how Little there is to his operation. And then post these massive checks that he was getting, right? Cause this was also at the advent of ad senses as revenue mom, right? It was time when like advertisers, like checks just didn't show up.
You didn't have magic ads showing up on your site that you got paid. You had to hire an ad team. And they had to go sell all these brands. Yep, ad team. Had to go sell the ads, right? Had to collect the money, right? Yeah, all of that. And for years, he basically thumbed his nose at particularly match.
com, which is, the 800 pound grill in that space. And they eventually bought him. That's part of match group now. But this is what I'm saying. He said, here's what it takes match to go to market, right? By running the equivalent of Super Bowl ads and everything else like that. What if I did none of that, and I was able to basically offer the same basic service, which is matching two people, or nothing?
And what would that look like? Hey, that's what we're talking about. Think of how many businesses are going to get created when someone's Hey, what if I just did that without all the costs?
What would my business look like? Without all the costs, without the complexity, without all the learnings, right?
Even until a year and a half, two years ago, There were a lot you had to learn. You had to know and have some core competencies or go out and hire for them, which is the more common route around, building the website, building the funnels, engaging with marketing, building customer service, creating the content, all of these things that can now be done when we say cheap, like it's almost inconceivable.
You and I haven't come from the dawn of the internet and built sites for lots of money for people back in the day. The fact that you can spin up a site for 15, which includes your first two months of hosting. And the entire site is built out. I need some modification or whatever, but you can get that done now for absolute peanuts, right?
That wouldn't have even covered a company lunch to discuss how we were going to build something back in the day.
Let's talk about what happens when we don't have a lot of. Capital that's required. Okay. Number one. Hey, I got a crazy idea. We own our company. Imagine that, think of how much ownership dilution exists, not because it's necessary, but because it's necessary to raise the money, to hire all these people.
And again, or in processes and efficiencies and things like that. Think of how many people will own a hundred percent of their company, among their team. As they can and should, because you actually just don't need those gobs of money. Oh, this is one of the things that
excites me the most.
I just love the idea that we're going to see so many more stories where the owners of the company, the original owner, the founding team the original equity holders still hold like 90, 100 percent of the companies. That's going to feel absolutely amazing. You and I hate nothing more, I think, than seeing these stories where it's okay, Founder did everything they needed to do.
They grounded out 10, 15 years, finally sell the company holding like two and a half to 5 percent of the company's come on, man,
because he had to, that was the toll you had to pay, right? Because the cost structure was so high. Now think about this. If capital isn't as much of a challenge as it used to be, think how much more time I can spend building a product.
Because for those of you that have gone through it, capital raising, we help people do this all day long. You don't understand how distracting that process is, and it's two fold. One is actually being on the campaign trail and actually raising the money. But what I would argue is the silent killer, it's every day where you're running out of it.
Where you constantly have a gun to your head. Where you're thinking to yourself, if I don't refill the bucket, I'm out of, I'm out of business in every 18 months from now. That is more distracting than anything. And
that, and the fact that we talked about this on a couple of podcasts, but I want to bring it up here again, it completely constrains the potential outcomes.
You have to go and raise more money. You have to sell your company. You have to take it public. There's no other way. To successfully escape on that path. And so I, I love the fact that not only does this reduce the burden to get started, that they will hold more of their company. That they will also still have a hundred options instead of three.
Which feels so well for it. You can fail.
And so again, if we think about the different parts of the pie chart that we were all raising. Okay. Infrastructure, again, I'm talking servers, hosting, and again, that's going to be different depending on your business. We talk a lot about tech businesses, etc.
But that's, for some folks, that's cost of goods sold. So just in time manufacturing, 3D printing helps reduce that. Different story. The next is marketing. We're performance marketing. Everyone's still gonna need a marketing budget. You're still gonna have to spend money to grow.
You'd be like, ah there's social media and there's SEO. Yes, but as those become more viable, they get more diluted. It's just that simple. If you were on social 10 years ago and you crushed it, geometrically different than if you're trying to get into social now and crushing it.
There's so much more competition. So there's always going to be a paid component, but again, I'm going to stick with this pie chart, the biggest part of the pie chart, 80 percent of everybody's pie chart right now. Now, what no one really thought about was what happens when that just goes away as a massive pie, right?
A slice of the pie. What backfills it? Profit? Yeah. But again, when that biggest chunk of the pie gets reduced by say 50%, not even the 80%, nothing crazy, 50 percent is a massive, 10 percent is a lot. Companies do massive layoffs to get to 5%, just to get an idea of how big, how big that pie is.
When we can start reducing like that, again, one, if our prices hold, that means that's net profit that we can use to put into marketing and things like that. The second part, and like what I suggested a moment ago, is we can make the price cheaper. Think of Marcus Friend at Plenty of Fish. Or we can make the price zero.
How many things get absolutely fascinating when you can offer them for zero dollars, right? Or damn near zero dollars. When you look at something, I'm even gonna use a hard good, because I think people only think about digital goods. When you can sell a t shirt that was selling for 70, not that t shirts have a lot of hard costs, they're ironically like the poster child for, Low cost, high output.
But, your cost of delivering that is literally 60 cents. Because you just have so few other costs associated with it. Your ability to bring products to market to change how products are consumed becomes geometrically different. And I think this is what we're about to see on the horizon.
Yeah. No, I think it's almost unquestionable that we're going to start to see things that were inconceivable to be commoditized, get closer to being commoditized, that we see new models for monetization that didn't exist before, right? But in the same way that, Our buddy from Canada took advantage of the AdSense movement because it didn't exist before.
All of a sudden it popped up, right? As you were talking through the marketing components before and yes, it will, you will still need a paid budget. We'll still need these things. And yet we will see new advertising methods or twists on advertising and marketing models that never existed before.
It will likely be incredibly cheap and incredibly more effective because they won't rely on mass marketing, they will be able to, to niche market at scale by connecting different people's eyes. There's all kinds of things that we can conceive that will happen and plenty that we can't conceive that will happen.
That will help to level that out as well. So even as we reduce the Staff costs, there are a whole bunch of other costs like the paid components of marketing, advertising, and everything else that we do that will also come down, right? Just a silly example, right? Even if you are still staffing people, all of a sudden your t shirts become a lot cheaper.
Even that has an impact, right? So as across the board, as goods and services become cheaper, it becomes even less expensive to build something new because the support costs, ongoing costs become that much less expensive. And who knows where else this goes, right? Energy costs can become significantly cheaper.
I don't want to go too far down a rabbit hole here, but these are the things that will start to happen that will impact the overall cost of building anything. From a t shirt, to a business, to a house.
And my example of a house is, by making houses cheaper, more people get to have them. This is a really important net benefit, right?
Think of how many things people don't have just because they're fundamentally too expensive to deploy. Look man, if you make
t shirts 60 cents, you're Restaurants will save money by not having to print those stupid signs that say no shoes, no shirt, no service. All of this is
connected. That is the fundamental change AI is about to break.
But here's what I want to wrap with and talk a little bit about a change in mindset. Among startups, among the narrative, which something we're a big part of. I would like to see a new narrative where startups can be proud of being small, but not the way we've done it so far.
And I want to talk about how jacked up the narrative has been so far. The current narrative, when you're prideful of being small, it almost feels like someone's patting you on the head saying, Oh, that's
adorable.
Yeah,
It's patronizing or it feels like an excuse. How many times have you seen this, right?
People will talk about, Oh we're trying to keep our headcount small and everybody else in the room is no, they didn't raise enough money to actually have a proper staff, right? It's exactly it.
And so up until now, there has been this reward for big, and I get it.
Lots of people tends to mean you're making lots of money, right? And that tends to be a good thing. There's a whole bunch of other challenges that come with it. It tends to mean you're spending lots of money. I don't know that you're necessarily making lots of money. That is also true. And so I want to see this new shift in the narrative that when we start to see people have these big 80 percent pie chart, part of the pie chart staffing lines, I want people to start to say, I want people to start to say, what's the biggest business we can build with the fewest number of people.
And again, this isn't an anti people thing. This is a pro efficiency thing. I was doing an interview the other day somebody was interviewing for a job here. And they were asking about, how big we wanted the company to be, et cetera. And I said, I just, I hope you understand this. I want as few people as possible.
Every person we add adds to our inefficiency, which we've done whole podcasts about. I get to know fewer people, like actually get to know fewer people, right? It becomes more distant. I said, but the problem I see with most founders, this is, explain it in the interview candidate, I said, they're asking the wrong questions.
When it comes time to, hiring somebody, their question is, who are we going to hire? And the question they need to be asking is why are we hiring at all?
Yes,
right. But what's broken that we have to go hire somebody?
Yeah. Now I look forward to the day when people start to flex a metric that looks something like this.
It's the ratio of staff or company size, or maybe just even OPEX. It's something we get beyond just the staffing lines, but the ratio of OPEX to value created or people served, I think like for you and I, we would look at this and go we want to help every founder on the planet, right? We want the number on the right side of that ratio to be as possible.
And we want the number on the left side of that ratio to be as small as possible. I'm looking forward to people flexing metrics like this. Which show how much impact you can have with as little resources possible. So it's just a, it's a business efficiency metric. But this is what I would love to see, versus yeah, we just hired our thousandth person.
Yeah, listen I'm glad you're creating jobs for the benefit of those people, right? So I get it, but what that tells me is you're asking the wrong question and I think what we're going to start to see is a change in mentality, which is so beneficial, right?
Because there's no downside to us saying let's be more better, more, um, recently, Sam Altman from, OpenAI, ChatGPT Sam said publicly that there's an inside bet among the Silicon Valley elite as to when the first company hits a billion dollar valuation with one
employee.
Meaning the founder, right? Not the founder plus an employee, right? Just some person. Yeah I wouldn't bet against that at this point. It can't
be. How could you not get there, right? Let's go back to our friend Marcus at Plenty of Fish. He, he gets a billion dollars, the billion dollars isn't the point, that's an arbitrary metric.
But, the point is, he didn't need more resources. He had the money to hire hundreds of people. And he was like, and I remember him at the same time, he's Yeah, sometimes I have to pull in my girlfriend because we have like too many customer service requests. And I just, I loved how specific that was.
Didn't even occur to him to use all of that profit to hire someone else. He's yeah, I could easily throw a person at this. No, just ask my girlfriend to step over.
I would love the new Scarlet letter in these conversations among founders to be, we just had to hire a hundred people and just this scoff of like, why, what are you guys doing wrong?
That you had to hire so many people like what technology are you not leveraging? What benefits are you not leveraging? And certainly from investors, I think investors are going to start to look at this good because this benefits them in so many ways. That's the thing. That's
the thing, right?
Like they're going to audit, they're going to want to know, right? They're going to say Oh, look something really strange about your pitch deck here. It looks like you're spending 80 percent of the money you're asking for on people.
We need 50 engineers. Why? What is so shitty about the first five engineers that you needed to hire 45 more?
What are they doing so exponentially poorly that you needed so more, right? So many more or like within marketing, Oh, we had 14 people on the marketing team. Yeah. Why? There's whole like parts of marketing that actually don't require humans. What did you not understand about how the market's moving that required you to hire those people?
These are going to be this, the new salient questions. And I got to tell you. It's good news for everyone. It's good news for everyone because it's going to focus everyone on spending more time focusing on what they're actually building. Versus the amount of time and effort and people that it takes to build it.
Overthinking your startup because you're going it alone. You don't have to, and honestly, you shouldn't because instead you can learn directly from peers who've been in your shoes, connect with bootstrapped founders and the advisors, helping them win in the startups. com community, check out the startups.
com community at www. startups. com to see if it's for you. Could be just the thing you need. I hope to see you inside.