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Oh, hello and welcome everyone.

I'm Patrick O'Shaughnessy and this is Founders' Felgate. Founders Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at Invesco Field Guide dot com.

Patrick O'Shaughnessy is the CEO of O'Shannassy Asset Management, all opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shannassy asset management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shannassy Asset Management may maintain positions in the securities discussed in this podcast.

Today's episode represents a new chapter for investors like The Best, and so it requires a longer introduction than normal. Starting today, I'll be bringing you two episodes per week on the same feed. On Tuesdays, I'll focus on investors, and on Thursdays I'll host builders, founders, CEOs and operators from all different fields. We call this new Thursday series Founders' Field Guide. There's nothing more interesting to me than how great businesses get built and how investors can identify those businesses at the right time.

We've already recorded with founders, building companies in food technology, infrastructure, shipping collectibles and many more categories. The goal each week will be to have a builder share what they've done, how they've done it and what they've learned along the way. We view this as a critical next step in furthering our mission to capture and openly share the world's best knowledge on business and investing onto the kickoff episode with Rahu Vorra. Rahul is the founder and CEO of Superhuman, an extremely popular product for managing your email.

Rahul describes himself as a computer scientist, gamer, entrepreneur and designer. You'll see quickly why it's the intersection of these areas that sets superhuman apart. We discuss why emotion matters when building products and how other entrepreneurs can learn from his experience. Please enjoy the very first episode of Founders Field Guide and stay tuned in future weeks, as we host leaders from Nike, Cisco, Twitch and so many more listeners as we explore the worlds of cannabis baking, not that kind manufacturing, hardware, software and many other topics.

Now let's dive in. Pamela, thank you so much for doing this with me today. There's a whole range of issues that I think we'll talk about for the first time with you, given your background and experience. And I thought a fun place to dive in would be with this idea of game design and emotion in software or digital products. Why are you interested in this concept and what have you learned building superhuman?

Well, it's superhuman. We build software like it's as a game, and that has been core to why people fall in love with it. But most software companies don't do this. Most software companies worry about what users want or what they need. But if you think about it, nobody needs a game to exist on the requirements. So when you make a game, you don't worry about what users want or what they need. You obsess over how they feel.

And when your product is a game, people don't just use it. They play it. They find it fun. They tell their friends they fall in love with it. So this idea of game design turns out to be an altogether different kind of product development, and it changes how people react. Today, our business software feels like we have to check our email. We have to submit expense reports. We have to answer based on our CRM. But what I like to ask is, what if we could make software feel less like work and more like play?

And with game design, we can talk a bit about the key elements of game design.

What makes for a good game with something as mundane sounding as email? What are the major lessons you've learned as you've experimented and tried to build that concept into the product?

Well, I've been obsessed with this idea of game design really for my entire life as a kid, I learned how to code just so I could make games. Before I was a founder, I worked as a game designer and as a founder. I've gone deep into the principles of game design. And as it turns out, that is no unifying theory of game design. To create good games, we need to draw upon the art and science of psychology, mathematics, storytelling, interaction, design, to name just a few.

And at Superhuman, we've identified five key factors to consider goals, emotions, toys, controls and this elusive concept of flow. And across the years, we've identified many principles of game design. So one principle would be make fun toys and then combine them into games. And a question I sometimes like to ask people is, well, what do you think?

Are toys the same as games to describe a toy in the digital software sense? What would be an example of a toy?

Let's actually differentiate toys and games and then I'll give you an example of toy from Superhuman. And it comes down to natural language. Actually, we play with toys, but we play games. A ball is a toy, but football is a game. And as it turns out, the best games are built with toys. Why? Because then they have fun on both levels, the level of the toy and on the game itself. No one super human.

A favorite toy is the time or so completer, which you use to snooze emails. You type whatever you want. It can be gibberish and it does its best to understand you. For example, 2D becomes two days, three becomes three hours, one mode becomes one month and the time also completed is fun because it indulges playful exploration and it's not long and on boardings before people start doing things like Hmm, I wonder what happens if I keep on typing test just the number ten?

Well, it turns out that's October the tenth at 10 pm. Or how about a sequence of twos? Well, that's February the 2nd. Twenty twenty two at 2pm. And then you see people start trying more complex inputs like in a fortnight and the day. And it's not long before folks start finding pleasant surprises. For example, time zone. What happens without you having to think about it. You can type in 8am in Tokyo and it does the math and it tells you that's eight p.m. Eastern Time.

And then most people are really delighted to find out that you can type and things like never. I want to send this email into another email. We'll literally never come back, let's say to our listeners. And to answer your question, what is a toy in digital software form? Consider features of your own product. Do they indulge playful exploration? Are they fun even without the goal? And do they create moments of pleasant surprise? Because if so, then congratulations, you have a toy and you're on the way to building a great game.

And this is something that I find most companies don't do because like I said, most companies are instead obsessed with what do people want, what do people need? And these are perfectly good questions. Do we have products market, which is our net promoter score high? Again, you need all of these things, but there's this extra level that you can get to when people find your software fun, because like I said, they don't just use it, they then plans.

Do you think the biggest opportunities for building companies like this is in the most mundane categories? Like I saw an example of a. Of course, you've been successful now you hear the superhuman for X, but you see the superhuman for calendars, for example, do you think that those kind of boring long standing haven't changed in a long time? Business categories are the best ones to attack with this mindset?

I think so. I do think the superhuman four X category is a little bit wider than just game design. And that's something that's taught my investing partner and I look at very closely. We look at things like is speed. Everything is the core value proposition. So if a super human it is it is actually the number one feature and super human. Every interaction takes place in one hundred milliseconds or less. Searches for your instantaneous. Our customers save many hours per week, they reports getting to their inbox twice as fast as before, and many of them actually see inbox zero for the first time in years.

It was really hard to pull that off, both from a product perspective as well as a design perspective as well as an engineering perspective. To your point, the areas where there's most headroom for this, where the fruit is hanging loose, so to speak, is indeed in those mundane categories, not because the solutions aren't achievable, but because of this thing that poor Graham calls schlepp blindness. The idea that it looks too hard. I think we've had two generations of founders look at Gitmo, perhaps realize on some subconscious level that you can build something better.

But that mind kind of steps in and says, nope, that's too hard. You can't go up against Google, you can't go up against Microsoft. Let's take something on that will be easier. That will be faster. And it does take time to take on some of these mundane areas because you often end up going against very entrenched products that are operated by incumbents and G.M. alone as one and a half billion users. And for example, I'm five years into C.P.U.

I think a lot of people looking at SUPAMAN go, oh, this thing kind of came out of nowhere over the last few years. But in reality I did have to grind along with all of my team for three years beforehand.

And you were building for three years with no clients. That right? Yes, actually I was personally building with no customers for three years. It was solo founda for about nine months to one year. Then I brought on boards, the other two co-founders, my first engineer, and about two years after that point. So three years after I started, we had our first paying customer.

One of my favorite debates in the world of technology entrepreneurship is the debate between sort of the lean model where you're iterating and failing a lot and learning through customer feedback and what I'll call the Kether boy movie production model where it's more sounds like what you've done, which is big, long effort that is almost produced like a movie would be with actors and a script and everything else. And you go to market with an incredible product, not one that's been sort of iterated through a crowd.

Describe your experience of the three years building. How do you get the confidence that you're doing a good job if there's no feedback from real using customers?

Well, it was hard and I remember it being a very difficult journey for us. So for context, in the summer of 2015, we started much like any other software company by writing code. And in the summer of twenty sixteen, we were still coding and in the summer of twenty seventeen we were still coding. And I felt this incredible intense pressure to launch both from the team and also from within myself. After all, my last company reported had launched, scaled and being acquired by LinkedIn in less time.

And here we were two years in and we still had not launched. But deep down inside I knew no matter how intensely I felt that pressure that a launch would go very badly. I did not believe that we had product market fit, although I knew it. I couldn't just say that to the team. These are super ambitious hyperintelligent engineers. They poured their hearts and souls into the product. I figured I needed a plan. And so in the April of twenty seventeen, I started my search for that Holy Grail for a way to define product market fit, for a metric to measure products market fit, and for a methodology to systematically increase product market fit.

And that's actually how I came across my product market fit engine, which is how many people know of me. It's that now infamous article on first round review where in detail I lay out this engine, this algorithm that we created, and it's actually a blend between the lean startup model and the fat startup model or the movie production model. I'm actually a big believer in both, and I would say we sit somewhere in the middle. I would say raise a tremendous amount of capital upfront.

I would say take your decisions as long term as you can. I would say don't put out a minimum viable product, puts out a maximally delightful product. But I would also say listen very closely to your users. Listen very closely to your customer. And run the superhuman product market fit engine because it really does systematically move you towards product market fit, but in a way that doesn't encourage you to fail fast. I don't think anyone really wants to fail fast.

I think people want to succeed inevitably. And that's really what we've oriented Superman towards.

Of course, I have to ask the question now for the high level overview of that engine, that product market fit engine, why you applied it in the way you did and sort of how you came to the idea.

Well, I searched high and I searched low and I read everything I could find. I spoke with all the experts. And then I came across this guy, Sean Ellis. I've shortened run growth in the early days at Dropbox, locked me in. And Eventbrite, he even coined the term growth hacker. Sean found a leading indicator of product market fit, one that is benchmarked and predictive. Just ask your users this. How would you feel if you could no longer use the product and measure the percent who answer?

Very disappointed after benchmarking hundreds of startups showing that the companies that struggle to grow always get less than 40 percent very disappointed. And the companies that grow most easily almost always get more than 40 percent very disappointed. In other words, if more than 40 percent of your users would be very disappointed without your products, you have initial product market fit. Now, this metric turns out to be more objective than a feeling. It's predicts success better than net promoter score.

And it's not only the best way to measure product market fit, we then used it to develop our very own product market fit engine, and that's where it becomes sort of this really complex algorithm. I'll do my best to summarize and perhaps we can include in the show notes a link to the process for our audience. So first thing you do is you survey all your users and you ask them the Chanels question, how would you feel if you could no longer use superhuman, but also three more?

Number two, what type of people do you think would most benefit from the products? Number three, what is the main benefit you receive from the products? And then before how can we improve the product for you? You then analyze the results to question number one and you'll get the set of people who are very disappointed, somewhat disappointed and not disappointed. And it's typical for a startup that hasn't been through this process before, that their score is in the region of perhaps fifteen to twenty five percent.

The superhuman the actual number back in the day of summer of twenty seventeen was twenty two percent. Now we very clearly do not have product market fit. And that may seem sad, but I at least could explain our situation to the team. And most excitingly, I had a plan to increase the score. If a startup is in the sort of five to 15 percent region, my advice is, well, you might want to consider pivoting the products or the markets to try and find a higher scoring seconds.

So you send out the survey, you get back the results, and you never survey any user more than once. You're emailing the survey out and you then segment.

And at this point, you want to understand who are the people who really love your product. And I like to use the concepts of the high expectation customer, which is a concept I found from Julie Sipan. She led early marketing at Dropbox, Airbnb in many of the great companies, and the Ecstasy is the most discerning person in the demographic. They'll enjoy your products for its greatest benefits and help spread the word. And the most important thing about them is that others want to be like them because they seem clever, judicious and insightful.

And this is best learned through examples. So we can take a look at to those Dropbox and I also go to Airbnb. Now, the Dropbox HFC simply wants to simplify their life, a trusting that organize the tech savvy. They want to get time back in a day. And at the end of the day, they just want to know that someone has that back when it comes to work. The Airbnb, HHC, is, of course, very different.

They're invested in being a good global citizen. They don't simply want to visit the places they want to belong. They want to experience Paris as if they really live there. An Airbnb early success came from focusing on these influencers and these tastemakers. So the big question is, how do you create your own HFC? Well, go back to the survey results. Take all the users who would be very disappointed without your product, and then just those users analyze their answers to question number two.

Who do you think this is best for? This is a very powerful question, as happy users will almost always describe themselves using the words that matter most to them. And you can then turn these words into a rich and detailed description of your own highest expectation customer. So now you know who loves your products. Then you go back to all your surveys, you take each response and you assign to each one a persona and hence the magic cards. You take the users who most love your products, those who would be very disappointed with it, and you use them to narrow the market.

I'll do a simplified example of superwomen to explain this in superhuman. The sets of people who most loved the product were founders, were managers or executives or business development. And back at that time in twenty seventeen, we were scoring less well with sales, with customer success, data science, with engineering. And so here's the trick. You deliberately ignore that set. You score less well with you deliberately ignore the personas who don't tend to appear in the set of very disappointed folks.

And this is a trick called re segmentation. It's really asking the question, a question that's not asked anywhere near enough, which is what if we don't change the product, that we change the market and adjust that we segmentation the two minutes of effort for super human our product market fit score jumped by ten percent from twenty two percent to 32 percent. And we were not quite at forty percent yet, but we made significant progress. In two minutes, the algorithm continues and there's this very nuanced way of how you interpret feedback.

Who exactly do you listen to that you can then use to further increase the product market fit score? And using that we got our product market fit score and twenty two percent to a quarter to thirty three percent to forty seven and then fifty six and then fifty eight percent, just a few courses later for SuperHeavy. This is why to bring it all the way back to the Siderov Lean startup and the movie production startup. I'm a huge fan of being in the middle.

Raise the money, hire the team, be really long term, build the product you've always dreamed of building, but also run the product market fit engine so you can ensure your systematically moving towards products market.

It's one of the key insights in the story I think is constantly ratcheting in your focus to the best customer. And even if that it seems like you're shrinking your market and therefore your opportunity, you're actually increasing your odds of building something that people are rabid about and in this case are willing to pay for, despite there being two enormous incumbent free options in Gmail. And, well, I guess Microsoft's not free, but it's part of a package that people are used to using.

I'd love to hear your thoughts on with that sort of in the books, how you came to the price itself. I think one of the strange things about software is figuring out how to price it. It's quite hard because there's basically no cost of goods. There's often huge fixed cost to developing it, which I'd like to get into as well. But the marginal costs are very, very low. So it seems like a strange thing to price software. And at thirty dollars a month, I'm curious just how you came to that number and what other numbers you might have considered the most important thing.

And I say this to. We found out I work with before you try and figure out pricing, you must first figure out positioning. And we started with this wonderful article by Ariel Jackson. It's also on First Round Review. The title is Positioning Your Startup is Vital. Here's how to nail it. NREL advises using a formula like the following for a target customer who has some kind of need. Your product is in a category. It has some kind of benefits.

And unlike the competitors, your product has this primary differentiation. And she gives the example of Harley-Davidson, the only motorcycle manufacturer that makes big, loud motorcycles for Muchow wannabes, mostly in the United States, who want to join a gang of cowboys in an era of decreasing personal freedom. Now, no matter what you think about cowboys, the era we live in or this notion of macho wannabes, you have to admit that pretty much nails the Harley Davidson position.

And I think a lot of their success comes out of it really deeply, truly understanding. Now, we thought about this really hard for Superman. And so we met up with Ariel, who, by the way, is awesome. We did further reading as well. She turns out to be the the products marketing manager at Google Gmail. So the perfect person for us to work with. And she also recommended Facebook, which I would highly recommend to anyone listening to the show, positioning the battle for your mind.

We ask ourselves questions. Are we the forward of email? The answer is no. Are we the Mercedes of email, not clients? Are we the Tesla of email? Well, now we're getting there. And all the way back in 2015, we came up with this position for founders, CEOs and managers of high growth technology companies who feel like their work is mostly email. Superhuman is the fastest email experience ever made. It's what Gmail could be if it were made today instead of 12 years ago.

And unlike Gmail, superhuman is meticulously crafted so that everything happens in one hundred milliseconds or less. And we've since, of course, expanded beyond this very tightly defined target. But it is so important to start to find, like you just said. And when you read this positioning, it's clear that super human is a premium tool for a premium market. And once you understand that position, you can then move on to your pricing. And one of the best books on this topic is monetizing innovation by mother Romanism.

Mammadov uncovers a lot of ways to develop pricing. And we used one of the easiest methods, which is the fan Westendorp price sensitivity meter. And so in late 2015, we asked about one of our earliest users the following questions. At what price would you consider superhuman to be so expensive that you wouldn't consider buying it? At what price would you consider Sufian to be priced so low that you feel the quality wouldn't be very good and so you would not buy it?

At what price would you consider Superhuman to be starting to get expensive so that it isn't out of the question? You'd still have to give some thought to buy it, and you still would. And at what price would you consider it to be? A bargain, a great buy for the money. Now, most startups, most technology companies, in fact, orient around question number four because they tend to be selling into a market that doesn't exist. They tend to be creating a new markets.

There are no uses for this thing. A perfect example would be Uber or Lyft. Back in the day, ride sharing didn't exist. They were in a race to get all the users. And so they were in this price war to be a bargain, a great buy for the money. But it wasn't like that. Everybody has an email account and everyone is using already either Gmail or outlook. And so we deliberately anchored around the third question, the question that also supported our premium position, which is when does it feel expensive?

But you'll still buy it anyway. And one can imagine that Tesla did that with the Model S, and they've definitely done that with the Roadster. And the median answer for the third question for us was thirty dollars per month. And that's how we picked our price.

And the final thing you should do once you pick your price is to do a quick gut check on market size, assuming you venture that you want to be a public company one day, for example, how can you grow into a one billion dollar valuation? Well, let's assume at that point your valuation is ten times your run rate. So your IRR is one hundred million dollars for us. That would be three hundred thousand subscribers at thirty dollars per month.

And that is conservatively assuming no other ways to increase average revenue per user, for example, no new products. You're not going to market. And we asked ourselves, do we think we can get to hundreds of thousands of subscribers for the products that we have built? We answered emphatically, yes. And we went ahead with that price. So it goes positioning, pricing, market size check. I love that looking back on the journey so far, what would you identify as the first big break in your favor in the history of the business?

The first big break in my favor. Gosh, I feel lucky to have been the recipient of so many breaks. It's kind of hard to pick the first big one. I would say that's the most impactful thing was having had the journey of repulsive. So for folks who don't know or they don't remember supportive for some time ago, it was the first Gmail plug in to scale to millions of users. And our vision for that was to help you be brilliant with people.

We showed you everything about your contacts right inside your inbox. When people emailed you, we showed you what they looked like, where they worked, their tweets and their social profiles. We grew very rapidly. And so about two years later, we were acquired by LinkedIn and at LinkedIn, we ran all of our email integrations and reported we kick started the whole ecosystem of HTML plugins. We sort of gave the blueprints to the community. And thereafter you had things like Boomerang Mix makes clear that, yes, where you name it, they were all kind of using that mechanism that reporters had used to integrate with Gmail because Gmail doesn't really have or didn't at the time have an API or an architecture.

And that was my big break. I think creating this company, which was sort of a cult phenomenon being acquired by LinkedIn, it lasted a really long time. They only just shut it down this year in March. So it lasted 10 years seeing LinkedIn grow. I joined just after the IPO, being there for two years, being around the smartest people in technology. At that time, I reported to our head of growth, which, as you can imagine, I learned tremendous amounts about morality and brand and word of mouth and how technology companies actually grow and having the credibility and the track record collectively.

This was all the biggest break. It was so big that when I came out to raise money for super human, it was like nothing I'd ever experienced. I raised the first million dollars off a screenshot of Gmail, where I just taken a red marker and said, I don't like these things. Why is this here? Why is that that we're going to get rid of this? Want to get rid of that? I'm going to make it blazingly fast.

And by the way, our customers are going to get through their inbox twice as fast. And with that, I got the first million dollars essentially overnight. And compared to my experience, the first time founder, I mean, it was just night and day difference.

The line in there that's so interesting to me is you learned how technology companies actually grow. I'd love to hear what you learned at LinkedIn about growth.

In my first one on one with Elliotts, I sat him down. I said, you can imagine sort of young me from about twenty six at the time, wide eyed, bushy tailed and like Elliotts, tell me everything that there is to know about morality. I want to make the most viral products in the world. And he said, well, calm down because there is no such thing as true morality. I said, Well, Eliot, what do you mean?

And he said, well, as you know, there is this notion of the lifetime viral factor. This is how many customers or how many users does one user creates over the course of their lifetime as a user or a customer?

And he said you can never sustain that number being greater than one for any period of time. And this is one of the biggest misconceptions that people have about morality. And I said, well, what about linked in with such a viral company? And he said, yes, but almost viral feature of the address book import only has a lifetime viral factor of zero point four. And he said and even Facebook, one of the most viral companies of all time, only sustained a lifetime viral factor of zero point seven, and that for about seven to nine months during that period of most rapid growth.

And I said, well, this is really weird then. And what are the benchmarks for these numbers? He said zero point two to zero point four is good. Zero point four two zero point seven is great if you're doing zero point seven plus. And that's phenomenal. Well, then the obvious question, the one that I asked is, Will, how do companies go viral? And he said, well, here's the dirty secret. It's never a feature.

It's never a viral mechanic. At the end of the day, it is always word of mouth. This is always brand. And the secret to Linton's success, much like Facebook success, much like any mass market consumer Internet brands is people talk about it in real life. It's because they've established a brand. And that was my first one on one with LinkedIn said of Worth It honestly completely changed the way that I thought about software, that I thought about growth.

And I think Super Human is a wonderful example of that. We are a brand company. We think of ourselves that way. We have the saying internally that what we make people feel is just as important as what we make and what we actually make is joy and software form. And just a few minutes ago, we went into the details on how we design for. Or emotion, and you can trace that all the way back to that conversation that I had with Elliot and actually all the way back, so that's when I work professionally as a game designer.

And I didn't know it at the time, but I was acquiring the skills as a game designer to create joy. And all I had to do was put two and two together, put the skill set for creating joy together with the eye opening insights from Elliotts to realize that one of the biggest things that we can do as founders and this is done all too little here in Silicon Valley, is to create brand companies, to create companies that grow based on word of mouth.

Is that is actually how the biggest companies grow.

Why do you think that happens? So word of mouth. I've often told people about a great product for various different reasons. Are you targeting a specific reason? Like are you even thinking deliberately about what you want a customer saying to another customer and then working backwards from that to build the brand? I'm just curious what the deliberate strategies are to build a brand company and software to do.

And this is sort of hard and covid period. But the first thing to do is to go to lots of cocktail parties and listen to people talk about your product or wherever they happen to hang out.

Fortunately for me, might happen to hang out at cocktail parties and I would kind of look in the conversation and just want to overhear them. And it was always the same when people talk about superhuman.

This is sort of in that first year before we really knew what our brand was going to be, it was always the same commentary. People would lean over their drink to one another and be like, you really have to try this thing. It is so fast. Superhuman is just the fastest email that ever experienced. Fast, speed, fast. Sure, I could talk about how its keyboard shortcut driven or that there's a native app, but the thing that our customers talk about is speed.

If I could boil it down to one word, it's speed. And that's how you should figure out what to orient your company around. What is the one word that your customers constantly refer to your products with? Once I knew that, it sort of gave me the breadcrumbs to start following. So I started to interview our customers. I started to sort of conceive the brand in my mind. The sentence, the fastest email experience in the world just sort of popped into my head at that point and we took it from there.

But the where I would start is what is the one words that your customers refresh your products with.

So when you're looking at companies as an investor, there's the classic better, faster, cheaper way of thinking about businesses. Obviously, super human is faster as an email client than anything else. When you're looking at companies in which you may become an investor, how do you evaluate the potential for the sort of brand that could drive that word of mouth growth?

It's not actually necessary for, I would say, 80 percent of the companies that we invest in, because 80 percent of the companies don't actually need to push a huge brand in order to generate large amounts of revenue, many of them, for example, our enterprise software companies.

But there are some that do.

A good example would be house to house is this incredible alcoholic beverage. They figured out how to deliver alcohol to the home, essentially by being a low alcohol by volume, a party that is made from grapes. Anyone who's worked in the industry will understand why all of that's important. But this means that they can legally deliver alcohol to your home and sell it online. And it's delicious to boot. And they have many flavors. It's House HHS. Go check it out if you're in the mood to drink something.

Now, this company clearly needs a massive consumer Internet brand in order to succeed. And we figure it's helped by going really deep with the founders. Do they intuitively understand press? Do they intuitively understand dementia? Do they intuitively understand paid acquisition and realize that acquisition won't solve the problems, but that it will amplify all of the other things? Do they understand content marketing, do you think, understand business developments? Do they understand other channels that might be relevant to them in this case?

Does the founder understand all of the ins and outs around alcohol purchasing and delivery in the US? And the answer for us for all of these things was for the founder, it was ten out of ten top marks. She's just such a phenomenal, formidable founder that she just understood all of these things to a level that Todd and I actually very rarely see is only a few of the founders in our portfolio who have that level of deep intuition around brand building.

What when you're looking at enterprise software business, sounds like a lot of your investments are in that category are the substitute kind of most important questions that you ask of yourself and of the founders when making an evaluation. It kind of pops up to a higher level.

And this is our generic formula for all investments, whether they're consumer or their enterprise. I look for founders. You have the following magic combination, number one. They know how to make something people want. And number two, they know how to make people realize they wanted a startup only has one of these things. It unfortunately will not be able to succeed unless on the skills side, the three of these. Secondly, I look for founders that demonstrates exceptionally high level of Grit's.

And I think of Grit's as the combination of passion and perseverance. Passion means that the founder will not easily get distracted with new interests or goals, and perseverance means that the founder will follow through with hard things despite immense challenges. I found that the founders, who are both persistent and relentless, move towards making the startup successful faster and more effectively than anybody else. And thirdly, I look for the possibility of a billion dollar outcome. And this is actually our main reason to say no.

It's quite feasible to find people who have no one who have number two, but they don't have a billion dollar thesis right now. I love this idea.

In the first part of the distribution side of things, product always is front and center. That should be a distribution is incredibly important. The way you phrase it is nice make people know that they want something. Talk to me a bit about how you think through distribution of superhuman. Obviously word of mouth is great and can drive awesome business outcomes, but I don't think there are many examples of companies that grow purely on word of mouth, even something like Tic TAC, which has become so viral and talked about a lot, spent enormous amounts of money on marketing.

Tell me a bit about superhuman distribution and what you've learned about software distribution.

More generally, the word of mouth thing is nuanced. I think that you should spend as much money as the markets will reasonably provide to you on marketing so long as you have word of mouth. The thing I would caution founders against is raising that money or taking out those loans and then spending it without the underlying pull from the markets, because that's where I've seen folks stumble. Now, the super human growth story, in the beginning, I always thought there would be three core primary pillars.

First of all, is variety and more generally word of mouth. Second is PR and third is content. And we've had really great luck and success with all three of those things. So first of all, on the morality side, we've created an incredibly viral product, especially Benchmark's in our industry of productivity or collaboration, if you will, and especially for single player productivity. We haven't had this level of morality since products like Dropbox, like Slark. That was one of the key things that I would talk about when I did my series, The Roadshow, visiting all of the venture firms.

And one of the things that folks dug in on was, wow, this product is actually really viral. And at the time, about 50 or 60 percent of our new customers were coming from direct referral in the products from existing customers. So that's the first. The second pillar is PR. I've always really enjoyed PR. I really enjoy talking to the press. I find it kind of fun. There are all of these interesting stories to tell. I'm a frameworks thinker.

They like talking about the frameworks as well. And so it was something that I felt I could personally naturally lean into. And Super Human is also a very mediagenic product. Email is a perennial evergreen topic. It comes around every five to ten years. It's suddenly became hot again this year with the the rise of products like hey, from the base folks. And so it's one of these things where because email is something that all of us to a billion professionals do it for three hours a day.

It's in itself is very mediagenic in a way that perhaps some other enterprise software as a service companies might not be. And the third thing is content. We've done this not in an SEO driven fashion. We haven't sort of tried to create a high velocity content production house. The way that we do this is every year I pick a theme and it's just one theme. This year it's been game design. Last year it was product market fit. And I write about how we do that at Super, but the way in which I write about it is to create a piece of evergreen concepts that I think will still be relevant five, ten years from now.

They become sort of de facto how people do things. The product market fit framework that I outlined earlier, my friends tell me, is is now actually the default way that founders are talking about whether they have products like it fits in. To me, that's a sign of successful content and it happens to you superhuman as an example, which is good for spreading awareness of superhuman. But really the fundamental goal that is to let's create this piece of evergreen reference content that's just going to be of tremendous value to this community over the next five to ten years.

When you were doing the last fundraiser, what was the best question that I've asked you?

I'll tell you what the most common question was and something where I was actually. Wrong and the victims were rights, the most common question was because I had this slide at the end of my deck that had us doing all kinds of cool things last year, this year, next year. And it was the year after that said, and this is when we will integrate was Office 365. And literally every single investor that I spoke to was like, well, this seems ridiculous.

Why wouldn't you just do that now and 10x the size of your market overnight? I said, well, because it's not going to happen overnight. It will take us about a year to build that integration. But even so, I'd much rather continually make the product better than sort of diverse engineering resource towards this activity that doesn't actually make the products any better, but it just makes it accessible to more people. And every single VC asked that question. Looking back now, I understand why they ask the question, which, of course, is, you know, there's tremendous value to massively expanding by 10x your markets over a short period of time.

And if you can do so, you probably should, especially if you can figure out how to do it without slowing down too much your product velocity. And so that's the strategy that we're pursuing right now, is we're leveraging the series of money, we're growing the engineering team, and we're going to build on Office 365. And we're working with Microsoft on this at the same time as continuing to build amazing features that our users love.

One of the things that you guys do that I think you've become very famous for and is again counterintuitive, sort of like one of my favorite questions that Daniel Ek asked is what's better than free emails free? You solve that problem. We talked about that already. But an additional thing that's interesting is that you, I think, still do manual onboarding of customers. That's a very strange thing for a single user software tool that I think in general people could adopt an email client and be familiar with it.

But you do on boarding calls, which strikes me as expensive, but also very interesting. I'd love to hear your thinking on why you did that and why you think it works for the business.

I've seen a lot of companies, especially in our space, which are broadly defined as productivity or collaboration, get this very wrong. I no longer believe in the traditional launch, but let's say you've built a new email client or a new task manager and you counteract the surface area for these products is absolutely massive. It's bigger than almost any other domain you could think of. And what that means is you also get a massive surface area for bugs as well as massive variability and how users want to use the product.

Now, most companies would launch their app, and because the demand for these products is so high, they quickly get tens of thousands of users. But guess what? These users will find thousands of bugs and that company will quickly get overwhelmed. They would not be able to fix the issues fast enough. And so these users will become disappointed, churn out the products, and then they'll tell everybody about their experience. And that is the very definition of a net detractor.

So in my experience, it's significantly better to do what we do, which is to onboard customers at a measured pace each week. That way you have the bandwidth to find any excuse that they come across to fix them and to focus on making them exceptionally happy.

And all of the said, there are three circumstances where it does make sense to consider a traditional launch, and that is when you need one of the three CS capital candidates and customers. If you need one or more of these, then maybe you should consider a launch in order to be top of mind for a period of time. But in the absence of needing those things, I would definitely do it the way that we've done. What do you think the impact is long term on the business model, which, again, software as a business model, as we've explored sort of ad nauseum over the last 10 years, is amazing because of the low marginal costs.

How do you think about sort of the cost structure of a business like Superhuman and how you establish sort of a great business and a competitive business growing towards that billion dollar outcome or beyond?

This, as you can imagine, was also a conversation. And the question that came up with basically every single investor that we spoke with, and I think everyone approached it with curiosity, but also with a little bit of a bias, which is surely you can't do this.

Surely you can't sustain this for those products. Why shouldn't the spreadsheets and I prove that we actually can. And the reason why we can is because the schools are very efficient. It's what Jason Lemkin would call click to close. So remember, these aren't sales calls. These are customers who have been presold. They come in via referral or via our websites. They pre authorized their credit card. Then they schedule in for an employee and we can then schedule these very efficiently.

And fact, a typical week for our onboarding specialist looks like between thirty five to forty five calls a capacity. And so when you do the math, 35 to five calls means that the sales efficiency, if you will, actually end up looking a little bit like that of an account executive in an enterprise software company. And so you end up with very similar arguments to economics and in fact, the superhuman. It turns out that the cost to the customer, when you take into consideration manager time what we call customer acquisition.

So you might call that a sales development reps or business development rep and the actual half an hour onboarding itself, it comes out to about one hundred dollars per employee. And that is actually less than what many companies spend on your customer acquisition in terms of paid advertising. So all we've really done, and this is how I explained it, all we've really done is take the money that you might otherwise spend on paid ads and instead spend it on having a phenomenal first 30 minutes with the product.

That's a fascinating idea.

I love your framework's way of thinking through things. What other major frameworks have we not yet talked about that you've applied productively?

I think the biggest one or the meatiest one, perhaps, is this notion of flow. And this goes back to the game design analogy, which is how do you design for flu? And it turns out that fortunately, this has been something that has been heavily researched, not only in terms of what flu is, but and how to create flu. And I also find that most product designers don't really study this. So I think we all have a basic understanding of what flu is and intuitive understanding.

You might say that your head's down or you're in the zone. Those of us who play musical instruments or who practice sports, we find that we very easily get into it via those activities. And it has been the subject of this intense academic study. And it turns out that flow has a very specific definition. So it is technically a psychological state of mind that has six subcomponents. Number one, it's the intense and focused concentration on the presence. Number two, it is so absorbing that we don't think about the future and we don't worry about the past.

Number three, it is so demanding that we don't care what others think about us now before it is so easy that we always know what to do next. Number five, it is so powerful that it alters our subjective experience of time, time kind of flash by in an instant or stretched out forever. And the basics. It is so rewarding that the activity becomes intrinsically motivating and some folks will know that those intrinsic motivation, extrinsic motivation and intrinsic motivation is significantly more powerful than external rewards.

So when you get into a flow, you have this intense concentration.

You don't really pay attention to your surroundings. Even your experience of time is sort of blending and warping and you're intrinsically enjoying what you're doing so much that you actually end up doing your life's best work when you're in slow. How do we help people get there? Well, it turns out that there are five preconditions and it's the last one that most products builders don't understand. So let's watch out for it. Number one, we must always know what to do next.

Number two, we must always know how to do it. Number three, we must be free from distractions then before we must get clear and immediate feedback. And number five, and this is the weirdest one, we must feel a balance between challenge and skill. And it's actually more subtle than that. We must feel a balance between perceived challenge and perceived skill if we perceive the activity that we're doing to be too hard. The emotion we actually feel is anxiety.

If we perceive the activity we're doing to be too easy, we risk feeling bored or even apathetic. And as counterintuitive as this may sound, this often means making your product more challenging to use. And we deliberately do. This superhuman superhuman massively increases to email skill level for everybody. But what if your email wasn't that challenging in the first place, or what if you were already highly skilled when you came to us?

If we don't do anything else, the experience will be too easy and you would get bored. Imagine a video game that was just trivial all the way through. Well, then and this sounds crazy. We increase the challenge level and so we provide a challenging goal. Hits Inbox zero, but do it without ever touching your mouse. Do it with only the keyboard and the keyboard shortcuts and Supreme in command and all of the other amazing things that we've built to enable you to do this.

But you're going to learn a new skill. And in doing so, you'll unlock a new level of mastery and you'll hit inbox even more than you've ever had before and you'll save ours. This now balances perceived challenge with perceived skill and helps get all of our users into a state of play.

I love that very cool and somewhat counterintuitive thing to build into a product, make it harder or more challenging. I think that's really neat. You at the very beginning talked a bit about the sort of beautiful imagery that comes when you hit one of the main goals in Super Humanity's inbox. Zero. Talk to me a bit about your design philosophy. It seems like something that pervades the product maybe pervades some of your thinking as well. What does design mean to you in a product?

There are quite a few different things that are part of what we call our joy formula for products designed for engineering. But I'll answer it just with the lens of products and design. No one is 10x execution.

And this is actually what Apple does, so I'll explain it first by analogy. Apple was not the first company to come up with this idea. Apple was not the first company to come up with such ideas, I believe in both cases, especially Samsung, that had in that flagship phones.

Yet they were the first company to execute it to a 10 X level to make that experience feel joyfully exquisite. You could argue that Tesla does the same thing with electric cars. They were the first one, but they're the first to do it at the level where they do it. And we do that with productivity. We do that with email. Superhuman is not the first company to let you set a reminder or to snooze an email. But the way that we do it is at that level.

It is at that 10x level. We are the first company to let you do it without ever touching the mouse. We are the first company to let you do it whilst indulging playful exploration like we went through earlier. We are the first company to do it. I talk to you in just a few characters of what you mean, like 2D and we automatically know that means two days where you can even type in things like Kufor or in a fortnight's or Friday at noon.

And we know what all of that means. We are the first company to do it where you can type in time zones. Like I want to get this back at 10 a.m. in Tokyo time. I want this to arrive in my customers inbox at 9:00 a.m. Eastern Time. And it's that level of execution is taking any given feature ten times farther than anyone else would take it. That is the first pillar of our production design playbook. The second is to be blazingly fast.

Now, when Paul, who was the employee at Google who created Gmail, sat down to build Gmail, he had this rule. It was the one hundred millisecond rule, the idea that every interaction should take place in one hundred milliseconds or less. Why? Because that's when things begin to feel instantaneous now. Long story short, Gmail is unfortunately no longer like that. Many actions can take a second opening and you can take a second such as can take many seconds.

So we've taken this rule and pushed it to the next level. We've created a fifty millisecond rule. We want to be twice as fast as the original Gmail experience, third keyboard of a mouse. We have this philosophy that for most things it's not everything, but for most things the keyboard is faster than the mouse. And you will know any number of sort of financial analysts or people who work in spreadsheets all day or people who work in the military, even who work in intelligence.

The first thing that you do or the first thing that happens to you when you join an intelligence corps or when you join any kind of financial institution is they rip out the mouse and the like. You are going to learn how to drive this fast forwarding to or Excel or this database tool or this query tool with only the keyboard. And the reason is that's when you have billions of dollars at stake or people's lives at stake. Speed truly matters. I have the philosophy that speed truly matters for everybody.

For us, the most precious thing that we have is our time. And so it's our mission to teach people how to operate at that level. Another would be full screen is focused as opposed to sort of trying to multitask by default. And Gmail, when you see and you get that little tiny composed window, you are multitasking by default. And so when a new email comes in, you are more than likely to be distracted away from the email that you're actually trying to write.

And superhuman, when you see when you're composing email, it's a full screen experience. It is not possible for a new email to distract you. We believe in a visually minimal, yet surprisingly powerful a number of buttons that has been on the superhuman screen when you're looking at an email has been three and it has been three for the last five years. How many products can make that claim? I think probably none. And the reason why we can, as we have this paradigm called superhuman command, basically you hit command and it pops up this beautiful command line interface sort of styles to evoke retro command line interfaces like those where you just type in a few characters what you want.

And it's actually super easy to use. You don't have to remember command line syntax or anything. You just type in a few characters of of the idea that you have and it will automatically do it for you. This allows us to put no buttons on the screen and to prevent feature creep from ruining our product, which does actually happen to most products over time. We believe an exquisitely crafted details. So, for example, there is this notion in typography of baseline rhythm where you take your page, let's say you're typesetting a magazine, you would layouts perhaps every four millimeters a line across the page, and you would want the baseline of your text, whether it's big or small, heading or bought into line to this.

You'd want your graphical images to align to this. You'll want your flourishes to a Longinus. And this is part of the secret of making a magazine feel like a magazine. That's how things feel premium in high end.

And historically, this has been nearly impossible to do on Web design because font metrics are hard, because every browser renders fonts differently, because very few people understand what metrics work, because you have graphical elements, because success is a nightmare. What Conrado CTO and I did in the early days of Superman is reverse engineer the Chrome font engine and built our own layout framework in access to automatically snap any piece of text. And that's the font, no matter the size, any graphical elements to a full pixel grid, which is part of what gives superhuman.

It's every beautiful magazine layout feel, which also supports the premium positioning that we talked about earlier. So that's a section of our product and design framework, our playbook. I insist that this is written up into every single product spec that we do, just so that as we scale the company, I'm less involved in the details. We're still carrying forward this torch of what we believe in.

If I were to go pull all the people that have worked closely with you at Superhuman or even before it LinkedIn and prior to that and maybe all the investors that know you well and ask them all what your personal superpowers were, what do you think the most common answers would be?

I think the most common answers would be a few different things. So I've had a few close friends who have been founders. Tell me and this is my currency co-founders. Tell me. That's one of the reasons they were most excited for working with me and why they said yes to working with me is that I have exhibited shockingly high levels, apparently of empathy, especially for our customers than they have ever come across. And so previous CEOs or previous people that they've worked with weren't able to dial up the empathy for customers to the ability that I do.

But apparently, again, this is just what they've told me. The interesting nuance is I can dial it down in an instant. There are definitely occasions when you need to be able to dial it down, because for the folks who have shockingly high empathy will know it's crippling. And actually this is something that I've spent a lot of time exploring with my therapist. So I'm a huge believer in therapy and executive coaching. I work with one of each and I've been exploring this idea of empathy with my therapist for quite some time.

And she started breaking it down for me, explaining that there are two types of empathy. There's a type of empathy where you can't help but feel what the person is feeling. And that's actually closer to sympathy and empathy where you sort of intellectually understand it. But you don't necessarily feel like now I actually exhibit sympathy more often than empathy. And so when our users get upset, when our users feel joy, I'm literally they're feeling it with them. And sometimes it's a little bit crippling.

And so I've had to learn over the years to sort of dial that down in order to become a more effective CEO. But I rely on the sympathy aspect to create good products. So I think that's what my co-founders would say. I think what my investors would say is simply the ability to be incredibly compelling.

I was asking Davidovich, who sits on my board, along with Marc Andreessen from a recent Horowitz about advice on closing executives, because we've just raised a Series B, I haven't had much experience closing executives in the past reports of souls before the stage of company. And so I was saying, well, how do you do this? He said, just be yourself. You're so naturally compelling. And it's like you kind of had a little bit of the Steve Jobs reality distortion field.

So just go and be yourself. So I think that's what our investors would say. You mentioned therapy.

They're really curious both with that and I guess coaching, too, as a second version, why you find that useful? It's something that I don't know anything about. I've not done either. Really. I've seen people say that it's really effective and I'm really just be most curious what you get out of it, why you find it valuable.

I think it's because I'm a framework's thinker and I think that there is just something about my mind that works faster when I'm asked a question. And this has historically been the purpose of Musa's in all of history, anyone who was sort of working at the forefront of creativity or even actually technology, mathematics and science, they tended to have Muse's people who they would just go to and say, well, I've been thinking about this. Can I talk to you?

This is my equation so far or here's my poem. I don't like this line. What do you think about this line? And I'm obviously not doing that for my poetry or my science, but I'm doing that for how I feel and why I feel that way with my therapist. And what I find is often she has the answers because she's a very acclaimed qualified therapist who has many clients, many of whom are also have similar lives to lead. But also she's just saying, well, why do you feel that way?

And what do you think? And simply asking the question is enough to kick the framework part of my mind into gear. And then I'm often shocked at what I am able to say over the next few minutes. And I'll often answer the questions by saying, well, point one point two point three point four, and then I immediately start writing it down because I had no idea that that framework was looking in the back of my mind. But it was.

And all it took was a question to get it out and then going forwards, I no longer have to go through the agony of not understanding why I feel the way I feel. I now have a new framework in my toolkit.

I love that you inadvertently just made me realize something about myself, which is that maybe the reason I haven't done it is because I'm the one doing it, meaning almost all I do is ask questions that I always am befuddled why anyone cares about that. But you help me understand now why it might be valuable to ask a lot of questions. We are all users.

I love that. I love that. Before we go to a couple of closing questions, we didn't spend a whole lot of time talking about your activities as an investor. I know you're active here, have invested in a lot of early stage companies. I would love to hear a bit about both your motivation for doing so. I could ask the question a lot about why I do so many different things. And I'm sure you get that question, too.

And so I'd love your answer to that, why you're interested in doing it. And then any kind of big thoughts on what's most interesting in the technology landscape today from an investing standpoint, first of all, was why do I do this?

So for me, the motivations are multiple. One of the most interesting is it genuinely makes me a better founda. It is exciting to invest in a disparate variety of founders, most of the fund activities, early stage, its pre-season and its seed, the way that I helped those founders is actually mostly by giving back. It's by sharing all the frameworks. And more that I've shared with you is like jumping in the trenches. It's by helping with crazy things that might be happening.

At the time, we had a portfolio company where one of the VCs literally just bailed on the company and said, we no longer want to be investors. And so it's hot. And I helped find another Tier one investor buy the shares. As you can imagine, that that is trajectory changing so that founder and for that company. So it's sort of getting involved at the early stages like that, helping them design their own ongoing programs, product market fit, game design.

I also do like to stay investing. We typically do this to space to date. And these are companies that many times are actually later stage and human. So, for example, I just invested in Coda and then seriously, I just invested in Class Dojo. And these are both companies that are further down the road. And I look to Shishir as a mentor and as a guru of sorts. I look to some similarly both such incredible founders and I find it inspiring and motivating.

And it drives me after I read to the text and I look what I'm doing. I'm immediately filled with ideas for superwomen. And I go back to our team and I'm like, Guys, we've got to try this. We've got to do this thing. Or I really think we should give this channel ago. Ohio, this type of person. I genuinely find it makes me a better founder.

What has you most excited in the technology landscape? I think it's so cool to see things unfolding from the ground floor on any major trends that are notable to you that you would point out to the audience.

That's interesting. So we tend to invest across quite a broad variety of sectors. So the following trends are trends that we're really excited about. First of all, is the trend that we call viral. So this is software as a service, products that can inherently go viral and they have the potential, like Elliott said, way back when, to become a massive consumer Internet brand. Superhuman, I think, is an example of this. And we love investing in companies like that.

Another is productivity and collaboration. You have things like Sigma at Table Notion, all great examples of this trend. I think we're really in the early stages of that. So there'll be more to see there as well. Are you have things like creative tools, tools that help a next generation of creatives build incredible things? I think that Andrew Mason's new company, Descript, which is honestly one of the most magical pieces of software I've ever seen when it comes to creating podcasts, there's a phenomenal example of that.

You also have things like business, infrastructure, some of our most successful investments as individual investors. I'm talking about investments from four or five years ago where we're now 40 or 50 X have been business infrastructure investments, companies like Cliburn's or Easy Post, where the API companies, often they get integrated, they become part of the operating system of the company, and so therefore almost impossible to rip. These are really exciting investments for us as well. And then we also love see brands.

So I mentioned House, which is the low alcohol by volume. Impressive. There's also magic mines that we invested in, which is building the world's first productivity drink. It's a shot of a sort of delicious honey, slightly much a favorite drink that you take alongside your morning coffee. And as someone who has tried a large variety of nootropics, this is by far the best one. It doesn't require cycling. It's healthy, it's safe. I'm James.

Beshara, who was previously a very successful founder, has that same set of attributes that Polina has just fundamentally understands. How do you build a large scale consumer Internet brand and how do you see works? So those are the areas that we get really excited about.

As you think about superhuman and I love thinking about companies in different acts, like an act structure, like a play act. One maybe is the time spent prelaunch building this kind of your vision of what a better version of Gmail might be? Maybe ACTA is the original success and fit with the market and and refining that and expanding into office. I'd be curious how you would describe what you think Act three will be for superhuman.

I'd say we're still in Act two. I'm not quite done with the the single player productivity aspects of super human. There's still plenty that we want to build. I measure it's on a few key metrics. First is how fast people say they're going. And today we're saving people hours a week in their inbox, twice as fast as before. The other is the incidence of inbox zero. How much people can hit that? So, for example, we're now at the point we actually just did this analysis with thirty six percent of people hit inbox zero in the onboarding itself and more than half of all of our customers hits inbox zero within.

Four hours is starting to use the products, I think these numbers are great, but I want to keep on pushing them. There's a lot of amazing things that we have in mind that can drive those numbers across. Three of the company involves a few different things, and I can talk about two. So, number one, I'm really bullish on pricing systems. So imagine waking up one day and this is the most extreme version of this. But imagine waking up one day and perhaps all of your emails are written for you.

So instead of facing 100 emails that you have to get through, they're all actually pre drafted. And all you have to do is come in and slightly tweak a few words here and there, which then trains the system so it gets better at writing your e-mails for you the next day. And then you had said, and it may sound like science fiction, but I think will one day get the I think another thing I'm really interested in is this intersection between productivity and collaboration.

And this was a very sort of counter intuitive decision that we took where most of Silicon Valley was going after collaboration and multiplayer tools and team oriented features, his US and we sort of weirdly said, no, we're going to build the single player thing that makes individual people incredible, their individual, IMO. And the reason that I did that was I believe in building software that people wanted to use for themselves and choose for themselves, not because their teammates are forcing them to use it or not because their manager said, hey, we're standardizing on JIRA over GitHub or whatever happens to be.

I really wanted to build a tool that people genuinely wanted to use. And we've done that. And we've got a little bit more to do there on the productivity side. But I think what you will see is over time we start to move towards collaboration. How do people work in email together? Is it signing and delegating tasks? Is it sharing this stuff? Is it collaborating on drafting emails together? And I think there's a lot of really interesting stuff to be done in that field as well.

Rahul, my closing question for everybody is to ask for the kindest thing that anyone's ever done for you. I've always actually struggled with the health of my back. This has been through to perhaps lifting poorly from time to time, definitely from sitting down for far too much of the day. And there was this occasion where it was shortly after a New Year's where I'd managed to sprain my back and in a really, really bad way. I mean, I was literally sort of paralyzed on the floor and I couldn't really move my legs.

I still sort of had upper body controls. I could call myself to my bed and so on. And my youngest cousin, sister was staying with me at the time, but she had to go and catch a plane and was going to have to plan to do an important thing all the way across America or somewhere else. And instead, what she chose to do was cancel that appointment and stay with me and get me all wrapped up and call nine one one and get the ambulance people to my room, which was an ordeal by itself because it was at the top of this building.

And stay with me all the way through this entire ordeal from being injected with these intense painkillers so they could actually bend me at the back and sort of put me in this wheelchair through in the ambulance, through to the emergency room. And then I was actually in hospital for the next week or so because I'd really sort of push my body right to the very limits I had to learn how to walk. And so I had to go through some degree of physical therapy.

And it was sort of five steps at the time and 15 steps of the time. Then let's actually try going up and down a staircase. And she was present for quite a lot of this journey and it was a true act of kindness.

So I would say it's that fantastic. Well, I've so enjoyed this. Like I said many times throughout the conversation, I just love people that have applied frameworks, not just theoretical, but actual hands on application of helpful frameworks for building great businesses. You've shared a ton of those with us today. Thank you so much for your thinking and for your time.

Thank you for having me. This episode was brought to you by Microsoft for startups. Microsoft for Startups is a global program dedicated to helping enterprise ready B2B startups successfully scale their companies. In our five part mini series, we were talking to Evan Riiser, CEO of Abnormal Security, about his experience with Microsoft for startups. In this week's episode with Evan, we discussed the founding story of abnormal security, what it is, what they do and how they got started.

So, Evan, I thought a great place to start would be just have you describe what exactly abnormal security does.

Abnormal security is a next generation email security platform we use to protect enterprises against targeted social engineering attacks like Supply-Chain, compromise fraud or business email compromise, which is the number one cyber crime in the world right now.

So obviously a ton more. Just as the world has moved, digital has moved to the cloud security, digital security has become ever more important. I'm always interested in how companies like this get formed, like what the Origin story was, were the the founding insight was can you describe the very earliest days and what led you to decide to start this business?

So in twenty eighteen when we started, there's probably trillion dollar. A year spent on it, and that's it on premise, and you have to imagine that 10 years from now is going to be 80 percent in the cloud and there's going to be something like 600 billion dollars a year of spend that kind of moves to like these new avenues, cloud based applications. That was like the first ones to enterprise from the cloud. The second one is just the asymmetric impact that Aiyaz had across industries.

I think it's just a big gap between the promise of A.I. versus the impact that security and its executives are seeing in their companies. If you contrast a level of sophistication of Google versus the thousand startups that either the big delta there. So I felt like as more and more security is moving to the cloud, there's a big opportunity for a company to take advantage that that trend. And then the third thing, which is I think is a good reason for any company to start, is just customer demand.

We talk to probably fifty one thousand CEOs before we started. They said that email security generally and specifically business email compromise with their number one worry and the fact that it was the number one cybercrime was kind of evidence of some sort of missing solution in the market. And finally, maybe like the shift of enterprises into Microsoft, three five as a platform enabled, all the APIs in that ecosystem enabled a platform that could support these new technologies that take advantage of A.I. to help out enterprise security teams.

Can you maybe put some extra meat around the actual vulnerability here that you're helping companies protect against? You mentioned the demand like, say a bit more about that demand. How specifically what were their security issues that your product solves for these companies? So e-mail secure is very broad.

There's a thousand different flavors and probably all of us have seen a couple of examples of that. For the most part, there's great solutions in the market today for spam and phishing and malware. The trend we've seen in email security is the shift from these bulk attacks to very personalized, targeted attacks. And so the canonical example of a business email compromise attack would be someone impersonating a CFO or CEO, a company using a person's identity to trick someone inside the organization to pay an invoice, but kind of leveraging that that social relationship or the implicit trust, then using that to basically steal money from the company.

So it's kind of the most basic example and they get much more complicated. I suspect we have very sophisticated supply chain compromise where attackers are breaking into trusted suppliers, vendors, customers, business partners and using the real email accounts of those people, which may not be secure themselves.

That's terrifying. Almost wishing I hadn't asked, but I'm glad that I did. What is the specific way in which you solve or address that problem? How does the product actually work?

It's a cloud data solution. And so if your customer you wanted to play a product, you would basically go into your Microsoft Havenport. You could one click now, install the product, authorize us to access all these different APIs that power the product. We analyze the data. We basically build these behavioral models that understand how do businesses work, how do people communicate with is a supply chain look like? And then every time we see a new email, a new Microsoft team's message, a new log in will analyze that against this kind of behavioral model.

But we think normal behavior looks like and when we detect an anomaly or something looks abnormal, we'll go flag that as a attack. And so I understand the normal behavior of business. We can detect these sophisticated social engineering attacks that typically bypass business process and ultimately lead to bad things for companies.

I'm curious how you thought about the early team. I could see it seems like one of those products that you would have to spend quite a bit of time assembling before you went to market with it. So how did you think about that early team and what was important for it? I think when it comes to building a team media strategy in general, it's important to note what does it take to win, what are unique strengths and then what are the gaps?

So for me personally, I'm a good recruiter and a good culture builder, but I'm kind of like pretty bad at every other job function. And so I knew that the purpose of this company was to create a a multibillion dollar enterprise company to go help our customers. And so when it came to the team, I just try to surround myself with the best people possible. And so I went to the person I thought was the number one enterprise investor who's seen multiple IPOs.

I knew that the best of the world machine learning. And I came from ad tech companies. And so we hired machine learning leads from Google, Pinterest, Twitter and a bunch of other companies. Right. To make sure we had Silicon Valley's best machine learning team. I hired the crew who ran sales, the number one email security solution. Today, I hired the head of product who built that solution. Generally, my strategy has been you'll find that the best people in the world, they understand the customer needs and can build innovative solutions that haven't seen before.

So it's basically built the The Avengers of machine learning from from from all the other places. That was the goal. You have an unusual funding story which you basically never hear. Almost all the successful companies that you hear that they were turned down one hundred times by one hundred different voices. I think you had a very different experience working with Greylock. You describe why you think it went so differently for you.

Generally, most venture capitalists, right. And probably particular, they want to take advantage of the secular platform shifts. They want to invest in world class teams. They want to build the big marquee companies that can transform industries. And so I think there's a couple things that gave them confidence. Generally, security is a big market. They saw customers really cared about this problem. And then I think the one thing that one question to ask, like, well, why now?

Like, why just this company two years ago? And I think the big trend is just, you know, people moving into the cloud office environment and in particular the Microsoft platform. And I don't just mean as the email security stack, but the whole office environment, it creates this new way of accessing data all through APIs. And so because of that, this is like the first time ever that a customer can go deploy this type of solution in a single click and then immediately get value without having to wait because of APIs give you both immediate access and kind of retrospective access.

But having to deploy a box in your data center without having to, like, change around your mail routing, this was basically a new way of delivering this product to the market. And I think that fundamental shift in enterprise using cloud offices that basically created the opportunity for us to build a high powered email security product that ultimately had better margins, faster sales cycles, and most importantly, it just a more effective product for customers. To find more episodes or sign up for our weekly summary, visit, Investor Field Guide Dotcom.

Thanks for listening to Founders Felgate.