 Hello and welcome to yet another conversation of Dreamers and Unicorns and this as you know that we talk to lots of really interesting people and today I have a person who is an investor, he's an author, he's been you know a person who's helped many companies scale up and there are lots of things that we are going to talk to him about but there is one thing that really intrigued me and you know most of the times when I think of choosing a guest for the show there's got to be something that really I want to figure out during this conversation so I really don't have much of a scripted version of it, we kind of really have a broad view but let me not spoil everything by explaining it. So let me just say that I'm delighted to welcome David Kidder, hey David welcome, welcome to the show and David is the CEO of Bionic, welcome. Well very grateful to be here, grateful to see you again and looking forward to the conversation together, it'll be fun. So explain to me what Bionic does and why do you call it Bionic, what's the story behind the name? You know it's funny my last company where I spent a lot of time just kind of selling the dream so to speak I used to say like our software product made you Bionic, better stronger and faster than you were but Bionic is an idea, it's like an exoskeleton, you know we're around you but it's still you, we're here to help grow you, it's still you, so that those skills, the people, the talent to actually ignite a growth revolution which is our purpose is ultimately making you and your company stronger better than it probably could imagine so I love the idea of Bionic, it's a great idea, it's a great concept, it's a great name. So David when you started to talk about your own journey, you know you've done many different things, I want to just really explore the motivations that have shaped you, you know kind of things that you cared about and what got you interested in growth of organizations and you know eventually I want to go and talk about this thing which intrigued me which is the growth operating system so I'm going to talk about that but let me hear your backstory, what shaped you, what were those experiences? You know I've been, I think of my entrepreneurship job as a career right, it's a skill to get good at and there's some aspects of it that I'm good at and some not so good at and so over the years my fourth company as a founder and I'm a co-founder of this company with Ann Berkwich, my amazing co-founder of Bionic since now, I guess for almost eight years old, it's a you know 60 person $25 million service company, we think ourselves as a product-enabled service company, we'll get into this but so though my last three companies were all venture-backed SaaS service companies, you know three exits, two worked, one didn't but you know it was a great journey of learning, you know I love the idea of less about getting to what you want or the top of the mountain because you discover there's nothing there when you get to the top and more about who you're becoming and so I just love the journey, the grind of letting these experiences shape you and grow and you know companies are basically reflections of the founder's journey in a lot of ways, they're there to teach you and you keep repeating the lessons until you learn how to solve them successfully and so I like that the gritty, the feel of growth actually in the job and business of growth now at Bionic, so it's I've had a great journey, been a very active angel investor about 45 investments and also three LPs and different funds over the last 15 years and love being on the other side of the table, just helping entrepreneurs work through the personal journey of doing this work because it's not easy, it's a really tough thing to do for a long period of time to get to the outcome you're driving to. So are you one of the investors who's very hands-on or are you a person who sort of writes the check and says I'll see when it grows to a substantial amount? Well there's two aspects of angel investing or seed stage investing that you need to know, one is in both the seed round and the A round almost 60% of the reason why you invest in the company is the founders, is the team that's the proprietary gift of the talent. The second thing is that you actually have to do a lot of investments to get portfolio returns, typically 30 or 40, about about seven to 10% are truly almost all of the unbounded returns, so if you're not comfortable for a long period of time, like a decade of getting to any returns and a lot of the failure comes fast and upfront, you're really in a relationship with those entrepreneurs for a long period of time and I think a lot of times you know I'll have invested and backed a talented entrepreneur you know twice, three times before they had their exit and we had success together, so I just love being in the personal leadership journey with those founders as they grow, as they discover who they're becoming, what their giftedness is, but more importantly is really solving a need in the world that they were born to do, that to me is the most important part of this journey. So in some sense what you're saying is that there are two parallel tracks, there is the track of the founder going through their own journey of discovering themselves and then parallel that plays out in the organization or the startup which they are sort of working on and at some point of time I think they merge, is that how it happens? Yeah I think of, here's three kind of framers to think about, the first job of a founder, this comes from Fred Wilson who is one of my investors in one of my companies, he says the job of a founder is three things, number one is your vision right, you have to be kind of right in on time within three to five years because when you ask an entrepreneur to what degree was good timing and fortune you know a big part of your success, they're like 80% right, it's being there when it happens, you predict the future and you weren't dead when it actually happened, so that's really about outside forces and your timing, so you gotta be very good on where that will, when that will happen but in the year you're in, you kind of have to be right in on time quarter to quarter within those sort of 12 month window and the reason why is because you're deploying capital and resources, so too much capital means you'll be dead before it happens and too little means you'll be too late, so that timing is really difficult to get right, second is talent, you gotta put the right people in the right seats at the right time, people that deploy that money and actually solve the need, whether it be product or services, even one mistake of your hiring in the first sort of zero to 20 employees can be fatal because by the time you get them in the seats you hire them then if they fail you replace them, it's almost lights out by the time you get the right person at the right seat, that's a year your life, that can be your entire funny round, so talent is the second thing, the third thing is never run out of money and there's only two ways, one is to raise it or earn it and in a way they almost take the same energy, so knowing what type of businesses you are you're building is really important to have them at capital, what you're doing. This next part, these other two elements are really critical that when you're building as a founder there's actually two jobs, there's building the company and building the business, so the company and business are actually different things, they're doing the same job, the company creates the business that solves the need, but the job of building those things as a founder is actually two discrete pieces of work, your culture, the systems, the mindset, the belief, the doctrine that it makes decisions, it leads the people, the hearts and minds to go solve that need which becomes the business, from code to strategy and deploying capital for those decisions, but I think of them as separate things, knitted together that ultimately win a space and you have to take very intentional effort and work and mindset to go with those things right. So in your career you've done many of these, so you've done it many times over, which of these three is the toughest for you personally and then we'll talk about the general version, what do you find the toughest and why? Well I mean cultures, you know cultures are overused, we're in, it's great, I think it's really, I think as this system really, we have a thing called the Bionic Playbook which describes what are the tools that our culture is created, what so our playbook creates the culture, so in a way you have to look at it as like if you don't like what's coming out of your business, the company, having to treat people or how well it's working or its beliefs it's, you can't really look at the individual, although that's an important thing to look through, if you've hired well, you got to look at the system right, you got to fix the way the company leads itself, the way it treats others, treats customers, what it believes, what it's obsessed with and tweak those things, optimize those things so that the outcome you're getting is improving all the time, because it's going to take a long time, there's never a state where it's never going to be finished, but you want a healing, optimizing system that creates a culture that builds the company, and as a result of that, the work that gets done of building the business, right, how it solves the need, how it services that need, how what tools and functions create this product or the service that lead to that outcome are really outcomes of building a team in a culture that's cohesive systematically, so I really focus on systems and less on the person when it fails and I take responsibility for making sure that the the culture is actually producing the right outcome as a way of measuring our success. Okay so you've got a viewer question already and so this is of course also an invitation to all those who've joined in, you know, feel free to ask all the questions while you know we keep talking for every interesting question that you found there, I'm going to bring it up and throw it out to David and it's good, he has to respond to these, so there's Preeti from Los Angeles, she says, can you please ask him, does he also invest in capacity building for enterprises? I guess the follow-up, I guess the question is what is capacity, human capacity, there's mindsets, there's systems, there's resources, you know, ultimately for CEOs, we you know, we have a company by now that works with you know, CEOs of large enterprises who have to go through transformations, you know, their big to bigger is really the business, the core business solves a total addressable market in the world today that's often being disrupted, so the needs and behaviors of customers are changing and so if they can't adapt, they can't grow, that means they can't really discover because when disruption happens the planning model of big to bigger fails, it can't learn fast enough, it can't break its biases to actually solve the need as it's changed, so the ability to discover what Bionic does is its belief is that venture capital entrepreneurship or forms of management, in the same way an MBA administrates the big to bigger, that discovery job at new zero to 100 million revenue is really a job of mindset and systems of portfolios around customer problems and needs and not markets and so the idea of capacity, the question that you're asking is really one of resourcing, how much resource actually goes into discovery versus capturing or planning as a business and the reason why it has to be a dynamic decision environment is because when a rate of change outside exceeds the rate of learning on the inside, it creates an asymmetry and that asymmetry actually accelerates disruption because you literally are trying to make what you have work and and and resourcing to create loss of versions, you know it's sub cost biases, these things reinforce bad decision making when actual change is happening in the world, so to your point, capacity to me is both mindset and resources that are in the position to discover new growth, most companies are wildly under invested in these places because they think of this as innovation, I rarely use the word innovation because there's so much brain damage around it, innovations is sort of like an everyday idea as an activation as a it's almost like a toy instead of a company, growth is about an urgent model so the same way we have Six Sigma and Lee manufacturing TQM as ways to manage the efficiency, you need an operating system that's designed for growth, you need to bring the pieces together, you know how you invest, how you take strategy and build portfolios, how do we build special forces for growth, how do we get you know we have a navy, where are special forces, are they skilled, can we actually grow things, do we have a funding model that can go from zero to a hundred million, can we go through the zygote to ugly teenage years of investing of hard things that take time and lastly is can we go fast, can we operate at speed, can we get things to market in 90 days that are born to die, the reason why this is so important that integrated system of growth, that growth operating system, that's the capacity, do we have a capacity growth, is it funded, is it has the mindset, the people that actually do this as an always-on skill just like we have for efficiency and most companies today don't have that and what we've pioneered at Bionic is like the anti-6 sigma of this generation, the anti-McKinsey of this generation, it's a really powerful team and tool and model that can be replicated in large organizations but it's a great question, more than you want it as an answer but hopefully it brings some color around what we do. Yeah we have so that sort of has triggered another question from Niranjan who wants to know that you know when you talk about growth, is it just customer loyalty that drives growth or is it a combination of other factors? If you had to add a little more nuance to it, what would you say? Well it's interesting because customer loyalty is trust, there's a vulnerability that says I'm with you in this journey and so that's actually a very powerful tool because the challenge in disruption is that customers don't know. So you can't go to classic big-to- bigger market skills, your agency and do a survey when they don't know, right? That's classic marketing, that's like go capture the market and the budget and the behavior that exists. That total addressable marketplace thinking is actually the problem because it's not about the market, it's about the need in the world, it's a customer problem needs so when you reframe that, not five big bets of zero sum outcomes but 50 non-zero learning the new behavior so we can solve it and capture it and go back to the organization and say what do we have? What are our proprietary gifts to solve this need in the world as it's changing? Loyalty will teach us in their behaviors because you're doing it with them, not for them, not inside out, not invention is such a problem. So I love the idea of loyalty but it's actually only in their behaviors that will teach us where they're going because they can't tell us because they don't know. So how we work, how we experiment with them is all the tease out can we find the new behavior and the God metric to scale into that that captures that behavior, monetizes it and solves it with them as opposed to for them. Brilliant. I'm going to sort of, you know, do a little bit of a reset of the place and so today we are talking to David Kidder who's the CEO of Bionic and you know if you don't follow him on Twitter I really recommend that you join him on social media and he sort of has this really, really, you know, interesting idea about what drives growth and he sort of describes it as an operating system which is what I got intrigued by and so that's what we are going to talk to him about. So if you have any questions do leave your questions in the box and then you know I'm going to put it up periodically and have David to answer that. So with that David I'm going to shift gears and say if you have to do a big picture explanation of what is a growth operating system and then we'll get into the nitty gritty in a little bit but just explain to somebody who doesn't understand anything so what is a growth operating system? A growth operating system describes the model, talent and capacity for always on growth. It's bringing together the collection of critical skills as a way to manage growth on a day-to-day quarter-quarter basis that most companies can't do or don't do. So in the same way they have systems to manage the optimization and efficiency and planning of organizations, they have blueprint planning, they have lead manufacturing of six sigma, they have tools they manage that measure the efficiency. There is not one that exists to lead and manage growth in most organizations. They call innovation, right? They launch a hundred things, a hundred things get launched, we have a lot of activity, a lot of ideas and they never die and the CFO and COS flip out because they have a hundred things they'll never die and everyone's making their idea work. The whole company gets excited and then intellectually dishonest because they have to be. They have to make their idea work and the worst thing in the world to do is fund an entrepreneur or an entrepreneur who loves their idea, right? Because they'll never die. They're going to make it work and the problem with that is that you don't understand is that the only thing that matters is the obsession with the need, the complete permission to solve it and whatever is the right idea in the answer, not making the one you have to work. So getting this right in mindset and systems helps the organization think, invest differently and work differently systematically to have always on growth. And Bionic has proven this at scale, literally at scale over the last eight years now with some of the biggest companies in the world, P&G, General Mills, Nike, Citigroup and others who've just been incredible and really building and layering in a model that they help lead the organization to create always on growth. And so I'd say this which is 30 years ago when you're like, we really need an ERP system to help manage back office, front office, efficiency. How can we take this local product and make it global? They can do that in their sleep today. You can operate at will today because these tools. The question is, why can't we grow at will today? That's a powerful provocative idea which is how can we can't turn on growth when we want growth? Why do we have to wait for it and cross our fingers and maybe it will happen and do all these crazy things that make us why is that at a permanent capabilities organization that's a pipeline that we're stacking every year in the same way we're taking cost out, we're bringing revenue in. That is the provocative idea and solution that we've been solving successfully now for eight years that's going mainstream. So that's what Viac does and that's really what an operating system is. I use it as a bit of a mind game. It's a bit of a trick because it's really not an operating system in the software system. It's about integrating an operating system and it's a thing that actually it has to, it propagates the CEO to think like, wait, I actually have an operating system for efficiency. It has these tools in it. I run the company with operating system and but I don't have one for growth. So it really creates this this new debate versus big to bigger mindset shift that says, I'm missing this capability to bring in the organization that is the organ that creates the blood flow that creates the growth that's always on it. It's not an activity. It's not an initiative. It's an integrated capability in the way I believe the company and so that's what we do. So is it reasonable to say that the growth operating system is the equivalent of when you have a build versus build versus buy or so there are polarities. What is the polarity of growth? Yeah, let me, I'll try to frame this. I think what you, what I'm, you could think of maybe as the growth OS is the is the anti-six sigma. You have six efficiency, you have, you need the opposite of that for growth, right? It's a system. So what you're asking is how is growth produced? The reality is for most of our partners is when you get into a portfolio around a new customer need, how you achieve that, how you successfully achieve that, you may often discover while we have a proprietary gift as a company but we are missing a proprietary gift and that is really where the organic question comes in. So the question of like, do we acquire this growth or do we build it organically? Build buy and partners those quit, build buy and partners with those four choices but you can actually go in and make a determination very early about do we have this giftedness? Do we need to bring it in? Can we accelerate the future? So if you can get there to that need fast enough, a model innovation where you have a proprietary gift and someone solved that technologically speaking, you could just acquire that and tuck it in and grow and scale it. Maybe, and so those are the strategic decisions about how you win the need in the world. The permission is very wide. It's no longer a question of like, we must acquire this or we must grow organically or we're good or bad either way. It really ends the sort of internal psychological war about what we have to have to be able to win a space and it really comes down to giftedness. You know, two mediocre companies don't make a great company. You can't smash together two incrementally bad companies. So you really, when you find two proprietary gifts, solving a need in the world where that one plus one equals three or 10, that's when you acquire. If you don't need that tool because you have it inside of you, you release it to the world. So those answers to organic versus inorganic become very clear throughout the pipeline as the commercial truth is in the room. I'll just say this, we get to jump to those next questions, which is, I have a lot of CEOs either after I do a keynote or in the process of this work, they realize, oh my god, my company doesn't tell me the truth. And whenever I hear that or it happens often, it's like, yeah, it doesn't tell you the truth and that's on you, right? It's not a criticism. It means that the culture can't fail or the cost of failure is so high they have to basically lie. And so that's a terrible place to be in. So the only way to get into truth in the room is to lower the cost of failure. So these people can speak and tell the truth based on the science of validation to a CEO whose job it is, is to create unfair advantage for them, but not subordinate so they demand a truth that's not true, which has failed a lot of large organizations, but to create a partnership where those people are together solving the need in the world. And so I think that we replicate that same environment. It's a huge alleviating factor for companies getting trust in the room, going in offense, feeling the courage to really lean into this work is really about truth. And I love that respect of our work. So, you know, there are lots more questions which have come up and just there's a quick one. Karthik wants to know that, you know, when you think about predictable revenue, is that, you know, even doable? How does one manage to build predictability? And I would sort of ask a follow-up bit on that, that if the moment you get it predictable, does it mean that you've sort of not in some sense leveraged the opportunity? Because if I know that it's going to be at five and you hit five, how do I know it couldn't have been 10? Yeah, I mean, it's a really, it's a complex question he's asking. So it's a good question, but there's, let me answer one, the second kind of a second part first, which is predictable revenue is comes in waves, right? So revenue can be predictable when you understand the need and the sort of behavior and budget, so to speak, that's allocated to that need and that problem in the world. And I would say that, you know, predictable revenue, I just one lens, I wrote this book called The Startup Playbook, which is, I interviewed like 40 of the best entrepreneurs in the world, Elon and Reid Hoff and others, and they talked about how to bet your life on an idea. But when it, when your revenue grows forever, basically in linear, you've discovered you need in the world, it means you've actually created a pain killer and not a vitamin, right? You solve the chronic life on malignant pain in the world that people will always, once they turn it on, they'll never stop doing it. And they often didn't even know they need it. So the nuance between this is, I actually think there are predictable revenue streams in the world, but they're typically reframing the problem or need, right? And so what you're describing is the other dimension, which is that tam to tap problem. Oh my God, the total-aggressible marketplace for, you know, let's say hair loss products, right? Like, I want to grow my receding hairline back. I want to get my hair back. It's one billion, right? Small marketplace over the counter drugs can solve it because I'm willing to put chemistry in my head to get my hair back, right? But the marketplace for keeping the hair I have, just preserving it is actually 50 times bigger because just slow it down. So I don't need to grow. I just want to keep, I'm going to slow down. Like that's an example of a total-aggressible need in the world that's orders of magnitude bigger than the actual person who would actually pay money to get it back. That's a gestalt. Many marketplaces are like that. And when you move from what's the actual custom problem and you listen and you solve it as opposed to making your software, making, making your chemical work, making your product inside out, with a magical powder that can grow your hair back, we're going to sell this, you're missing the need. So it's a simple idea. It's actually quite profound. So permanent revenue growth lives when we can discover that painkiller that is very often just beyond the marketplace that exists that leads an unlimited problem that happens and understanding it through a lens that most people understand. We had taxis. We have Uber. We had the, we had people who could deliver things. We now have accessibility in marketplaces. So we're really searching for marketplaces that have unlimited demand. So when you're investing these companies, there's supply and demand. So you always want to asymmetrically invest in something that has unlimited new demand. And you can solve for as opposed to like, we can create a lot of supply. Supply-based companies are really technology-driven or we can make it as opposed to we've tapped the demand. You want to search for that thing that people haven't seen because of the lenses they view the world through. And that's really what you're going after. I think that's underneath the question, the one you've sort of brought to mention too. So a lot of people say that, you know, when you look at what COVID has done is this accelerated a lot of trends. Some people say it's disrupted the world and some people talk about the opportunities in different sectors like telehealth or education and all of that. Do you believe that the post pandemic world is fundamentally different or is it an accelerated version of the old stuff? What is your view? Well, I mean, certainly there's a lot of aspects of should versus must going on in organizations about accelerating digital change. I mean, I think there's some aspects of the business that will never change. We'll never go back because they've realized that we can work differently, much more efficiently at a much lower cost basis. That's really under when you look at the margin growth of companies who successfully navigated this moment and they're like, whether it be real estate or systems or distributed or whatever it is, they're learning like, oh my god, I don't need to travel two thirds of the time and spend that money. There's so many things we needed to do because we had to be there or do things that actually weren't true or they're enabled in ways now that you actually have the same, you have a good enough outcome with a powerful result that you won't spend money on in the future. That's changed our digital architecture, what we've accelerated, what we're abandoning. This is a bias crushing moment about what we believe to be true. There's some things that will be permanent as a result of that. But there's also new needs and habits that are formed where we were buying vitamins, but we actually were buying painkillers. We didn't know it. So like home delivery food services, the before and after of Blue Apron was that model alone was probably a fatal path that now became successful because they had enough time and money and demand to say, I'm not going to go to a restaurant really for a year, but I need high quality food in my home. Someone needs just to do it for me because the mental bandwidth to like cook, clean, manage my house, it was a huge painkiller. Before it was a vitamin, it was just a hobby to do that. What a nice experience you could cook yourself. While it turns out it's a permanent habit. So things like that create new habit, once you get beyond 69, 70 days of things, those needs are not going away. They are going to become permanent new line items in your life. There's this great app called True Bill. I encourage you to download it because what it does is it reveals the role of subscriptions in your life. So here's my challenge to the audience, which is download True Bill, connect it to your credit card and your bank accounts, and let it do its work because it's going to tell you how many subscriptions you're actually paying for in a monthly basis in your life. What you're going to discover it's going to be shocking. There are things in your life you're paying for that you may not even realize, most like you don't, that are activated providing value that you're paying for at real cost that become permanent habits in your life that are passive. And so these enabling functions in our life that we're paying for that we were not discreetly going and buying up a shelf, but we've activated and turned on. That is where permanent revenue lives and they become habits. They have taken over the habits of our life and it's a new behavior that we're willing to outsource the jobs to be done for a money time and energy that we never needed before, but they've actually been on for a long time and they're on today. So I encourage you to do it because it's a great revelation of what permanent revenue looks like and new needs, and it shows you that gestalt that just beyond that check is the actual need type of insight. Yeah, you know that's an interesting model that there are so many and this whole subscription economy that's coming up, you know, which is you know the newsletters, the podcasts and a whole lot of people are putting things behind paywalls. So at one level as a creator you want the subscription. As a consumer you want to be more selective. So that's an inherent polarity that I guess which is going to be there. So guys just to reset the room, you know I'm talking to David Kidder who's a CEO of Bionic and I'm going to talk to him about the five elements that make up his growth operating system. So talk to me about the five elements and then there are questions which are there and I'm going to sort of bring them up as well. All right, so what does a growth operating system encompass? So every company has versions of this and they're typically scattered where there are toy quite frankly. So the first and most important element, the linchpin is what we call the growth board. That is the investment body with a growth mindset. The guns and badges of leadership can invest in portfolios in the total addressable problems or customer needs in the world. So they're no longer looking for what we have today, they're investing in the need in the world. So it's no longer the five big bets that some expensive consulting firm told us to make and never die. It's we're going to launch a large volume of bets that most of it will die because what the mindset of the leader has learned in our companies is basically this these two startling insights. Number one is that 70% of all the growth you ever get, all the billions of unbounded return come from 7% of capital deployed. So if I invest 100 million, 7 million are all the return or 93 million or 93 of the ideas are going to go to zero. And the question is, why? Why did that happen? Or more importantly, how do we just invest in the 7 of 100 work? And the answer to that question is you can't because the 93 teach you the 7. And this is important to recognize the faster and cheaper we get to the 93 failures to get us the 7. And I'll care if it's 1 out of 10, the numbers don't matter. It's the mindset about what you're looking for. Because we have to go back and say well why did we invest in them? So when you go back to the beginning and say well why did we invest in those 7, there are two investment signals in the early stages. The first one is high conviction. And what that describes is a deep understanding, a proprietary gift of why us and why now. What is the outside force that we do not control that's making this happen and what's our proprietary gift? That's a signal. The second signal is disagreement rates. We make all of our money from the ideas with the highest disagreement rates. So it's really about non-consensus investing. So when we have consensus, we're basically screwed. Because we're planning, like that's not discovery. It's the very nature of us planning means we're consensus around this is a good idea. And when we think it's a good idea, that means that we haven't learned anything new and nothing we haven't brought in new to the world. We're not learning, we're reinforcing. So once a leadership team, that growth board, can understand how we reframe a large volume that's with a high degree of failure non-consensus, high conviction, non-conviction decision making, they become better investors because they create the permission to learn. That's the first job. They had to have a growth mindset and they got to become great growth investors. So the other components are discover, validate and build. Discover is how do we take the super expensive, you know, beautiful mind strategy we bought from expensive consulting firm and make it the right portfolios. How do we reframe there in the total addressable problems in the world and then do the generation of the solutions to that problem. So we start with the right 20 or 30 or 50 so that we can begin the investment journey so we can validate them. That's the third component. We need special forces for growth. Who can move fast, tell the truth, lower the cost of failure, run the experiments to get out of the out of the dark alleys and into the light so we know what we should build, which is the third element, which is we got to learn to invest across a stage of adventure. They replace classic tollgate financing inside of a company with venture so teams can sell the dream and unsell the dream moving back and forth across the stage of seed ABC rounds. Those rounds are like raising children, right? Zag it to five-year-old, five-year-old to 10-year-old, 10-year-olds to ugly teenagers. Each one of those stages is a different set of questions and a different set of metrics. You're learning about signals that become indicators that become metrics. They mature. So the beginning, we're just looking for signals. So we can't ask a five-year-old kid, well, how fast can you grow? Right? Which is like, what's your rate of return? What's your margin? That's an impossible thing to know because you don't know what the right revenue is. You're learning. Nor can you ask that child and say, well, I'm going to, I'll feed you if you can guarantee to be the Olympian, which is basically I'll invest you if you make your idea work, which is also completely stupid, right? You're about, you're trying to win a new need, which is can we understand the need? Do we understand the 20 or 30 signals that become a habit so that as I get to an a-round that product to market fit, I know that of the 20 signals, I know the one metric that drives the whole business or the small cocktail or two or three metrics that drive the whole business because none of else matters. If we get those right, that God metric and drive it to the unlimited demand, we're going to get a billion to our company on this, right? So what's more important in this, is it the signal or is it the metric which helps me to understand whether that signal is really the right one? It's what happens over time. A signal is a behavior, a habit loop that becomes an indicator because there's been a lot of signals. Do versus say, we want to do, that becomes an indicator. So you'll go from 50 signals to 10 indicators in the A and B round, of which only one or two of those indicators drive the whole business. So we can't do this whole business. A lot of these leadership, they want every answer because they're derisking it because they want consensus and safety. No, we want top line growth on an unbounded return. So we want to find out what that God metric is that drives the whole business and then we can scale that because we know what we're investing in because that indicator is going to become a core metric to the business. And once it starts to peak, we then can start working through the rest of the metrics to improve them for scalability. So that journey is what venture capitalists do. C-Day BC rounds is a funding model that is replacing the Tolgate model on big businesses. Big enterprises today use a Tolgate model that they make a plan and then they fund the plan. They haven't even asked the question and is this commercially true? So they spent a lot of money launching a zombie idea and then no one buys it or they don't buy it repeatedly which they could have known upfront in the funnel years ago or months ago for a small amount of money because there's no habit, there's no behavior long before. And then they use it as a funny model where they commingle commercialization in the process. So what do you think the probability after a CEO invests 10, 50, 100 million dollars in a plan that that team is going to come back and say well we hired our agency and the agency said it's a great idea or more importantly your baby is ugly. It's never going to happen. And then we put Agile on top of it. We're going to be Agile all the way over the cliff. Agile is really important, very important at the stages when you know it's commercially true. Then we leverage that not before. So when you use these tools, how you fund it, when you fundamentally change this you actually can go in and confidence and scale things because you know what are the stages of growth that are through a totally different mindset and lenses that we are using when we're discovering and capturing new needs in the world. Does that make sense? It does. And when you when you think about it then the question I would have is you know are startups going to be the beneficiaries of a growth operating system or is it going to be the incumbents? You know those who have grown to a certain size and now sort of faltering or you know they are in a stalemate kind of a scenario. So who is really the person when you build the company who are you building it for? Yeah, I was building it for for big enterprises. This is I mean startups do this. This is their job. This is what a founder's job is to do is to build a culture and a business that does this as a way of working. I mean there's there's so much I mean I've contributed my own book into the space. There's there's so much so many great books out there about learning how to become a great co-founder which we never had growing up. I mean the amount of content in the world about how to build businesses and niches is everywhere. If you can't start a company and get some traction with the tools that exist today you probably should be joining one. You don't have to be a founder like you can be a great co-founder. You can be you can be a great number two. You know you know you know founding in a company is is really difficult and massively risky and most often fails. And it fails not because you you're not good at what you do it's because it's an outside force. You're not there when it happens or what you have what happened wasn't true right. You believe your idea as opposed to the need in the world. So getting all these newest things right makes the job really hard. But the idea of an operating system to your to your question is is really not who should know what who can and can't do this. It's more about returning a refounding moment to a large organization getting back to the capability in the mindset that really began. It's if you listen to Jeff Bezos's letters on last you know 25 years he has an idea called the day one mindset which is it you know the first day in a company is the greatest energy permission joy etc. That's something that he recommits the whole company to all the time because he wants them to have a mindset that it's possible can do and they can be an offense as a permanent way of thinking not protection not playing not to lose playing to win and they take bets bold they're obsessed with the needs of the world they they follow outside forces and if you're a CEO and you're not say you know are we doing that most organizations have eradicated that because they're focused on the quarter which is important I get that but they have no chance to win the future until they bring these systems and mindsets back to create the permission and the truth as an everyday job not a not an initiative an everyday job that's what ambidextrous leadership is the ability to operate and create and every new see in the world in the world is going to have to have that skill so would the role of the founder or co-founders you know when you look at depending on the number of people what is the number one job or does it change there is no number one job which is is it to find the product market fit is it to raise capital is it to you know motivate the employees is it to keep an year on the ground is it to pivot quickly enough is it to make sure that there's enough cash I mean what would be your priority list you know how would you sort of do a priority ABC what are those I mean those they change over time I mean they so this is why the job is hard because you have to set the priorities they're very dynamic over time I would say that the absolute number one thing for me is is you you got to build a product that wins whether it be a service or not you got to build truly a one of one product in the world so you know the question is is well who is going to build that product so can I attract the talent can I build the culture that can make them thrive because if this is truly a talent arms race because they're the ones who can solve these so if you're looking for the signal you know have I built a great company it's because I have a great product right that's truly one of one in the world and you know one of my great investors was the founders fund they always said competition is for losers right you know don't chase press releases don't chase features solve the need build a one of one company call the marketplace into you don't chase the marketplace don't chase your competitors it's an arm it's a it's a arms race to the bottom so I think if I were to pick one thing it would probably be that the company is obsessed with the need and their focus is doing a product that solves it that's truly one of one of the world that product question service or technology otherwise is really the is the number one thing and then you build the organization that because and but the nuance what I'm trying to say is is that the culture company is not obsessed with making their idea work they're obsessed with solve the need of which their product is the evidence that that's actually true so that's why I would make that number one number two is talent right you know getting it right and number three is is has the ability to either generate its own oxygen i.e revenue or you have a stable of really solid believers who have the capital to enable you to capture the new net solve that new need in the world indefinitely quite frankly you know when you look at the books that have shaped you as an entrepreneur as a writer you know what are some of those two or three books that you think are really supremely useful and impactful um I mean the the uh Steve blanks the four step steps the epiphany changed my life I mean that that book is is the most important book I've ever read in business I haven't I would tell me again the name it's Steve blanks the four steps the epiphany to the epiphany um he wrote it he was teaching Berkeley or Stanford it was Berkeley actually that was his like interclass book and and so much has come out of that book lean start has come out of others but um but it's his thinking in that model that really worked but I would say maybe it's a tie but the other ones that I think the other two that are you must read and it's the bag of the two best non-instructional books are Ben Horowitz's books the hard things but the hard things oh yeah and what you mean who you are they are far and away the greatest like truth of founder led journeys and who you have to become to do this job all that you could ever buy and as a small plug if you're looking for just really good advice the the book we wrote 10 years ago the star playbook it's like it's the best advice on like the top three lenses that Elon Sarah Blakely Robin Chase that that book is basically like a toolkit A and B role of just great wisdom um of how to actually do the job like I wrote the book because it's like um it's like a gut test like when you when you're testing your gut like am I making the right decision going in there and opened up like if there's a whole section like hiring and firing and funding managing your board and managing yourself and how to deal with failure you can read 20 quotes from Elon and always have people and be like okay I'm not crazy or that makes no sense to me if it doesn't make sense to you you're probably like oh I'm drawing from the right the wrong biome of my experience so I use that as a tool even today to see like am I really understanding this with a dimension and making a good decision so that's a great toolkit but those three books the Four Steps to Epiphany and both of Ben's books I think are the greatest startup business books of all time yeah so so you're talking about the Four Step Epiphany and then you're talking about the hard thing about hard things by Ben Horowitz and also by him the more recent one he's written about culture so that's also another great one yeah I just you know heard him on this podcast which he does A16Z Live where he answers something called what's called the boss questions you know so how do you take those decisions which I think is a really very very good podcast I would sort of look at that the other one that you know the other one that I would sort of really think which I really like there's Peter Teal's book where he defines zero to one you know which I really thought was an interesting idea where how do you think about something as a you know it's a more of the same or it's a truly original idea do you think more startups succeed because they are you know truly original one in that category or is it that you don't have to be the first one to the market but if you can improve the first one whichever is in the market and do something way better you're most successful which of the needs too I mean there there are just fewer of the one-of-one companies for sure but I think that when you look at I mean execution engineer execution evidence tool like those things I mean if you look at you know so zero to one is a is a fantastic book of course Peter's literally a genius and have you spent spent time with him we I described those he has seven sort of lenses and the startup Playbook has five but they're very similar and they in the beginning you know you're you're looking through lenses in your mindset of deploying your time, energy and capital so the question is is what are you investing that time, energy and capital in and the the the five lenses of the seven that that that are kind of outlined in zero to one are basically this the first one is is proprietary gift why you what is the thing you know about the world that no one else in the world knows and yet that's really the secrets and you never give your secrets away but you're always talking about that's why that competition is for losers why would I tell the world my secret the second is is you have extreme focus in a way optionality is the enemy the more things you do the weaker the company so getting focus on the need and how you're going to solve it is hugely critical concentrate your energy like a laser excuse me the third is the pain killers and not vitamins you got to build things that are solving chronic lifelong pain the last two lenses are about execution so the 10x factor I want to be able to have the company sit on the one thing that if I asymmetrically invest in it will be impossible to replicate and the fourth fifth lens is the idea of monopolies permanence how can I intentionally build permanent in the life of the customer so they can't leave those lenses become the way you think it deploy capital so how you think how zero to one of these books is really about the mindset of the leader how what they value what they deploy their energy through how they think like that role people over value activity and urgency and quite frankly fear zero some fear as opposed to non-zero understanding that's a huge psychological change for the company when they have a non-zero mindset because it's more so often there's more patient patients then they they're winning something else right they're not winning the dollar their competitors have they're winning the need in the world that the behavior is going to and that's that's hugely important to stand so whether you're building on top of a Russian rocket that you know SpaceX first bought you know and now is building their one engines and built like they knew that there's a progression over time we will eventually solve the who's going to build our engine but if we don't get a rocket that's reusable and can land that doesn't even matter so that's the timing I got to deploy the energy and timing if they were just about the technology they would have built the software the rocket from day one and they would have spent all their money as opposed to just getting the thing into orbit so that's the point is that how you think and how you deploy your capital as opposed to solving the need versus making your technology work is fatal and it's fatal fast so anyways I don't know if I answered your question I got off a ranch because I get excited about this but really hard to do the job well because if how much thinking matters and all of it what are you reading now you know on my I'm in Arizona and I'm speaking at a conference this morning actually right after this and so I'm in this room which is an ugly backdrop but I next to my bed is Adam Grant's new book called Think Again Adam is a a friend and advisers and our board advisers at Bionic a lot of what we do at Bionic is is a direct influence of how his research has led to basically how do you invest in non-consensus high conviction how do you do non-consensus investing is really a lot of his thought leadership but he's also just amazing human beings so I'm just starting that book which is great and I also have the new HBR which which actually has an article about 70 venture capitalists share their secrets of how they invest so I love that learning that we're doing my own understanding of it okay so that's something that I'm reading right now as well Adam Grant's book Think Again brilliant book I really like it I liked all his previous ones as well I'll say most of them I've liked except for Plan B which I didn't like that much but everything else I think I like a lot yeah he's awesome yeah and so thank you very very much David you know this is this is been really fascinating thank you so much for sharing your ideas sharing your reading list sharing your framework of looking at organizations that clearly something works because you know the biggest names the Fortune 250 are the ones which are working with you so it's a great thing you are on too thanks a lot for your time and so appreciate your sharing your wisdom with us very very very thank you goodbye bye thanks