The Death of 30-60-90 Day Plans

What happens when speed to completion collapses from quarters to days, and your planning cycles become obsolete overnight?

In this episode of KP Unpacked, KP Reddy and Nick process life after the Zero RFI launch while unpacking why every startup metric that mattered five years ago just became irrelevant. From PE firms opening San Francisco offices because "you can't remote control this from New York" to one company going from $1M to $61M ARR in six months, the conversation reveals why ARR, CAC, LTV, and 30-60-90 day plans are all anchored to a time domain that no longer exists.

KP argues repeatable process is the fastest path to mediocrity when Claude can generate specialized workflows on demand. Why optimize for quarterly goals when proof-of-concept to revenue can happen in a week? Why build sales pipeline methodology when the only metric that matters is cash trending up or down? Nick counters with the shift happening in venture diligence: Craft Ventures' SaaS formula (meet these metrics, get funded) is dead, Workday's CTO just quit to be an individual contributor at Anthropic, and services businesses are suddenly attractive again because institutional knowledge stays in the AI, not employees' heads.

Key questions answered:

• Why are PE firms rushing to open San Francisco offices after decades in New York?
• How did one company go from $1M to $61M ARR in six months?
• Is the triple-triple, double-double SaaS growth formula dead?
• Why did Workday's CTO quit to be an engineer at Anthropic?
• Should founders still obsess over ARR, or is that metric obsolete?
• Why is repeatable process now the fastest path to mediocrity?
• What happens when proof-of-concept to revenue takes days instead of quarters?
• Are 30-60-90 day plans anchored to a time domain that no longer exists?
• Why are PE firms suddenly excited about services businesses again?
• Should you measure sales pipeline metrics, or just refresh your bank account?
• How does institutional knowledge stay in AI instead of leaving with employees?
• Why is KP anti-process now after writing an entire book about optimization?

If you're still planning in quarters while competitors ship in days, tracking vanity metrics instead of cash, or wondering why your playbook from 2020 feels obsolete in 2026, this episode will force you to ask whether your time domain is calibrated to reality, or anchored to a world that already moved on.

Listen now.

Transcript

Model Release Time Warp

SPEAKER_02 0:34

It's like a week. This is like a truly a fresh conversation. We never go this long without chatting.

SPEAKER_01 0:41

Yeah, you know what? If we take the time domain and adjust it for claw for anthropics releases. And normally software release is like once a quarter. So what we've done is we've shifted the time domain. So what we haven't talked in like maybe a week, but if you use that as your reference point, it's been like three months.

SPEAKER_02 1:03

Yeah. True. You anchor everything to model releases. You're in a very fast existence.

SPEAKER_01 1:11

Yeah. I've never studied like theory of relativity much. Like it's I feel like it's just like, you know, when physics starts to sound like philosophy? Like there, there's a there's a point where physics really starts to sound like philosophy, right? There's not uh there's not a lot of data, right?

SPEAKER_02 1:29

I've got a book here called The Tau of Physics, which is just basically the blend of I mean it's it's meta metaphysics, which is like when physics becomes mystical and yeah, philosophical.

Moon Talk And Conspiracy Heat

SPEAKER_01 1:42

Like when's the last time you saw a quark? Have you seen a quark lately? Like it's just stuff like that. It's like which is funny with the Artemis thing, right? Everybody's talked about like, is this our first time to the moon? Yeah, like maybe.

SPEAKER_03 1:56

Yeah.

SPEAKER_01 1:58

And I had a friend tell me, like, hey, you know, the Chinese are already on the dark side of the moon. I was like, really? He's like, Oh, it's it's well known. I'm like, you mean on Twitter and the conspiracy channels? And he's like, No, man, like it's known. I'm like, what are you talking about?

Artemis Awe And Tech Optimism

SPEAKER_02 2:14

So man, it is it is such the yeah, just right now, this current moment in time, it is just a complete feeder and and complete catalyst for anything conspiracy theory. I mean, just like everywhere you look.

SPEAKER_01 2:30

But don't you feel like we're literally in the like most amazing time of our life? I mean, I just I get up every morning just so hyped, right? About Artemis. Like, I was I was sitting down with my three-year-old showing him like the rocket land in the launch, right? And he was just like mesmerized, and then we're like playing with his blocks, and he's like, Papa, I'm gonna make a rocket. Like, it's just like I don't know, like in the 80s when I was a kid, right? We had the challenger stuff, we had PCs and video, you know, we had Atari, it's like we had video games, we had kind of I think good music. Like we just had a lot of stuff going on. That's the only thing we don't have right now, is good music, but I think there was just like a dynamic of pop culture and science that made life just like super, super cool. And I feel like we have that going on right now where there's this intersection of like cool shit with science and then like society cool stuff, and we've got some nonsense going on, but we've always had nonsense going on, right? I mean, it's that is a constant, right? That we will have some level of nonsense, societal nonsense going on, and it's just how it is, right? But I just I mean, I just think it's just wild, right? Like we're sitting here doing stuff in AI and building stuff and trying to build trillion dollar companies, and Artemis is taking off, and you know, our portfolio company icon, who's been working with NASA to build habitat on the moon, I mean, there we're probably gonna see something out of them. I don't have any insider knowledge, it's a private company, so you know if I did I could share it. But I mean, three years ago when they got that contract, four years ago, when people are like NASA's getting icon to figure out how to build habitat on the moon, it was like, why? Like, oh, that's just some kind of government boondoggle. Why would we ever need this?

SPEAKER_02 4:20

No, there was no there was no near-term path to the moon, right?

SPEAKER_01 4:23

And now look, now everybody's like, What?

Public Backlash Against Big Tech

Social Media Binaries And Politics

SPEAKER_02 4:25

Yeah, you know, it's like why seemingly, seemingly overnight, it's I just feel like uh inspired you do highlight inspiration rate since I was like maybe a kid. You do realize that the vast majority of people don't have that same optimistic outlook right now, though. Like the vast majority of the vast majority of people are not excited about AI. Just this week, there's a story about how a city council member in Indiana, his home was shot up because there was a proposed data center being being put right smacking that town in Indiana. Literally 13 shots through his through his window. Like there's a major revolution against all the things that you're excited about. I've I've seen people talking about just dismissing, you know, all the excitement around Artemis simply because it's you know, this, it's the Trump administration that's that's trumpeting it. And why are we spending money on this? It's like the anti, there's a whole lot of anti-space, like anti-capitalist, anti-space constituents out there. And I I just think that you know, to me, obviously I'm you know, I'm you know, a techno optimist. I believe in the same things, I'm excited about the same things that you're in. But it's also interesting to me that there's a lot of people that are completely inverted on their thinking and like they're completely scared and afraid and thinking all the investment going into AI and space is wasteful. And uh, but but but that exact is exactly why where we started, conspiracy theory-wise, it just is feeding like both sides, both sides, you know, you are on these extreme poles in your belief systems at this point in time, I think.

SPEAKER_01 6:04

Yeah, you know, but my point is like this like when the challenger went up, I mean, like all these things, right? The space shuttle program was very expensive. And we're dealing with the 80s recession, right? And I think, I don't know, I feel like back in my day, I just feel like there's the difference now is there's just so many more megaphones to voice your opinions that it feels like a lot much. But here's what I'll tell you though: take social media out of the bat, right? And you're talking to your like local barista, your lot, like your local people, right? Your friends, your kids' friends, and all that. I don't know that I'm here. I mean, look, everybody's upset about a lot of things, right? There's there's lots of things to be upset. There's equally as many things to be upset about as there are uh to be optimistic about, but there's certain things like I think that you just have to be in awe of, right? Like it's it's not political. It's not, it's like they did we did what?

SPEAKER_03 7:02

Yeah, yeah.

SPEAKER_01 7:03

People are doing what? Oh my like I just think that awe, right?

SPEAKER_02 7:06

I do think I do think Artemis, like the vast majority of people did have that experience when seeing footage from you know, from space, looking down, looking down at Earth, like the the photos coming out of it and the videos, they're just nuts. And so I do think that was more unifying than anything I've seen technologically.

SPEAKER_01 7:25

And and I do think, like, look, you know, in the world of like seeking happiness, right, in our in our lives, I think anything that creates a visceral childhood, childlike emotion will outweigh anything, right? I went, you know, I never I don't go to many movies, right? Because it's just like it's like a time suck, right? And also, like how many movies I went to go see Project Hail Mary, took an afternoon off, went to go see a movie.

SPEAKER_02 7:51

I've been wanting to see it, yeah.

SPEAKER_01 7:52

I haven't got like you took an afternoon off to go see a movie, you get up at 4 a.m. and start work. I'm like, needed a break, right? Had a had a window of time, went and saw the movie. Dude, like it's such an amazing movie, it's such a great movie, right? Also, great timing on behalf of the movie people. You got Artemis going, got Project Hail Mary. I've never been a huge, you know, fan or not fan of Ryan Gosling, but he does a fantastic job. It's just it's like it's it's just a great, you know, make make it kind of feel like crying a few times type of movie. But it was it was great. But I think like I don't know, man. Like, I'm just gonna keep beating the drum. We are living in the wildest and most interesting of times. And you know, there's a podcast that you and I both listened to. I don't know if you listened to Tetragram lately.

SPEAKER_02 8:42

The Adam Newman episode I listened to.

SPEAKER_01 8:44

Yeah, he had Jonah Hill on, and Jonah Hill was like, Ah, yeah, yeah, I saw that. I haven't listened to it. Yeah, he was trying to say, like, the minute I got off social media, I've been living my best life. He's like, I just don't like I talk to people, I get all my news from people, I'm interacting with people, and he's like, the great thing about people is they don't they're not wild in person, yeah. Nobody in person is their social media personality, right? Yeah, but I think we know we have to decide, like, oh, we hate Elon, so anything he does, we have to be hateful about, and any you know, you know, I don't think my political views are that under wrap, right? Like, so anything Trump does is horrible, which he does a lot of horrible things, but it's like there's just this like binary thing, and it's like both can be true, Artemis can be amazing, right?

SPEAKER_02 9:34

Yeah, sure.

SPEAKER_01 9:35

And Trump can have trouble making good decisions.

SPEAKER_02 9:39

Yeah, yeah.

SPEAKER_01 9:41

I wish he would just use Claude before he does anything, just going to Claude.

SPEAKER_02 9:46

Should I they've been they've banned they've banned Claude in Washington, DC.

SPEAKER_01 9:53

I just feel like maybe he needs a different voice than the people around him, and just like use AI to run the country, like we might have a better outcome. I don't know.

SPEAKER_02 10:01

He's he's definitely going sticking with the human element in his his recent posts. Yeah, this is.

SPEAKER_01 10:08

Well, you know, I wrote that it's it's kind of funny, right? Like when you talk to people that are or or nobody's not biased around politics.

SPEAKER_00 10:16

That's a lie if someone says they're not pol, you know, not biased, like you know, less biased.

Cognitive Overload And Hard Decisions

SPEAKER_01 10:21

And you know, they say like there is no good decision, right? In some of these situations, like with Iran and all, there is no good decision. There's just it's just a lot of bad decisions you have to go through to figure out what to do. And you know, I wrote that article about construction and cognitive overload, and I was talking to somebody, actually a recruit today, and his dad's like a carpenter, like in the field. And I was like, hey, like one of the things we think about, like AI and robotics, that people kind of, you know, everybody talks about productivity and this and that, but we also have to think about safety, right? Like a human element is safety, and construction has one of the highest suicide rates, and there's two reasons for it, right? One, cognitive overload. I have a lot of people banging on me, emails and drawings and whatever else. And then I'm out in the hundred degree heat and getting the physical overload. So unsurprised, you put a human under these conditions that some people might break, right? And I was telling this guy, this hopefully he'll accept our offer. You know, I was like, hey, like what we're doing at zero is really trying to understand, like get that cognitive overload down to a set of decisions where human judgment takes over. And then I was like, then we invest in a company, Estia, that does like cooling and like we're thinking about these things, right? And he was like, That's so cool that you're thinking about these things. I was like, Well, I mean, yeah, that's the job is to think about these things. But if you think about cognitive overload and construction, what about like making decisions about going to war? And I'm like, I'm unknown. It's like, you know, I get up every morning as you do, and we get all this economic data. I'm just like, does it mean anything? It's like, oh, if the economy is doing well, we might see a rate cut. If the economy's doing bad, we might see like which one is it, right? Yeah, and it's it's almost like made up that all this data actually leads to any conclusion about anything. Are rates going up or down, Nick?

SPEAKER_02 12:19

Well, we have a new Fed chair coming in and appears he'll be non-hawk-ish, which so now I have to do the inverse math on what that actually means for rate. It's like it's yeah, for for basically since since 22, since the rate hikes happened, like all bad all bad news has been good news for rates, right? And now it now it feels like it's we're maybe going back, you know, to to the reverse, where like actually you know, like bad, like you know, bad news is actually bad news, like seeing the oil, you know, oil prices go up and you know, inflation likely to come back, like that's actually, you know, that's that's bad news. But yeah, the game theory on macroeconomic data and I mean to your point just about like strategic geopolitical decisions and war, it's like the amount of the amount of variables at play and the the second, third, fourth order consequences are just I don't know how you play that play that game on the chest.

SPEAKER_01 13:17

There's only two things you there's only two things you need to know about, man. You you prompt Claude and you look at Kalchi. Yeah, just Calci is just a an accumulation of consumer sentiment, right?

SPEAKER_02 13:31

Crowdsource consumer sentiment, yeah, for sure.

SPEAKER_01 13:34

And Claude just will help you accumulate all actual data and you just like stick them together, and that's what's your answer. Those are the only two data sets you need, just like insane.

SPEAKER_02 13:43

Careful where you place your bets.

unknown 13:46

Exactly. Yeah.

SPEAKER_00 13:49

So I don't know, man. It's it's it is a wild, it is such a cool time that we live in.

The Future Of AI Is People

SPEAKER_02 13:55

Indeed. All right, so you're back on your you're back on your posting game. Had a couple this week that I flagged. You want to jump in? Sure, let's do it. Let's get back to unpacked. Okay, so here's a post from Tuesday of this week. So the future of the future of AI is people, people who are astute and committed to personal relationships. In the construction industry, people build for society. As we continue to expand, we are looking for firms and individuals that are aligned on this idea that that AI helps people to deliver value to clients. The biggest growth opportunity with AI is entrepreneurship. The early risk associated with startup costs and risk can be daunting, but I'm really looking forward to working with entrepreneurs who see it the same way. So, first part of the post. So the future of AI is people. I think like that that's somewhat paradoxical, like kind of runs counter to the to the narrative on on labor replacement, specifically with white white-collar jobs. So yeah, what do you what do you mean specifically by the future of AI is people?

SPEAKER_01 15:01

Well, Nick, that's how you get all the clicks, is by being paradoxical.

SPEAKER_02 15:06

That is that is true.

SPEAKER_01 15:07

Yeah. Look, I think I I saw this post about a company like that's using AI for accounting, and they're like, how much of your time is spent on the mechanics of things versus the understanding of things? And so I think back to any any business in in general, right? Is that there's so much data coming at you, there's so much information coming at you, and you're trying to make sense of all that. And then I think human judgment comes in, right? And I think when you human judgment has to come in, and then generally, like all of us are accountable to someone else, right? So you take those set of facts and your human judgment, and then you're making a recommendation, right? And that recommendation, while sometimes is set on based on a set of facts, right? That AI can help you with, a lot of it has to do with the pedigree, track record, and credibility of the person that's delivering it to you, right? If I start coming to talk to you about, hey man, renaissance art, I think we should go buy this piece of art, you're like, dude, like what do you like? But Claude told me that we should go buy this piece of renaissance art. It I'm I'm showing up with a set of facts, but no credibility. You're like, dude, what do you know about Renaissance art? I'm like, I mean, I'll just like Googling it, you know, like so. I think that human, that that human loop of not just using, you know, getting all this data and making a making judgment, you know, having a set of human judgment is one step. The second step is we all have someone that we're accountable to in general, right? So a lot of that decisioning and approval process will come from the human relationship with that person. When someone looks and you say, Hey, Nick, that's great. So you want to invest in this company? That's great. So what do you think? Ultimately, it's someone will say, What do you think? And if all you do is say, Well, the facts say, if you're a robot, people aren't going to take you credibly. It's like, no, dude, like you've been doing this for a minute. Based on what you've seen, based on what you know, what do you think? What does this mean to you? It was funny. I was out with these guys with Sapphire Ventures, you know those guys spin off of SAP, and they did some analysis upon their portfolio companies, and all the companies that did horribly, they had a hundred percent consensus from the partners.

SPEAKER_03 17:28

Yeah.

SPEAKER_01 17:29

And they were like, but you would think there'd be higher hit rate, it was like lower, yeah. Like their worst investments were based on consensus. Yeah, it was the one where people had facts plus opinions and maybe a little bit of intuition where people had some level of disagreement, are the ones that did the best. Makes sense, yeah.

SPEAKER_02 17:50

That shows they're non-consensus, right?

SPEAKER_01 17:53

But that's people, yeah, for sure. That's people. That's not showing up with the right slides and the right charts and shit like that. So I think I think in a world in a world where our business is all about making lots of decisions that are all interdependent on it, you know, like whatever decision you make doesn't just affect you, it affects the guy next to you.

SPEAKER_00 18:15

I I think that the human element is huge.

SPEAKER_02 18:19

And how do you see that? How do you see that playing out? Like when you think about when you think about you know the future of our team at Shadow or the Zero team, like what's the balance between leveraging AI to the fullest extent possible and and you know running multiple agents at once, and then the and then and then the human element. Like, how do you think how do you think about like what what what's good in both categories?

Non Consensus Investing And Founder Patterns

SPEAKER_01 18:45

So I think there's this interesting balancing act, and I'm sure you've experienced this, right? Using AI to get shit done. Got it. How has AI helped accelerate your learning for me massively? I feel like I like I have the ability to take two ideas that normally I might just like go, I don't have time to go research that. I think two ideas, throw it into Claude, and I'm like, oh wow, I didn't know that's how that worked, right? And so I think, you know, like we have little ones, right? Like, how much benefit is Claude for us? Like, Papa, how does this work? And you're like, let me tell you how it works, right? Yeah, so I think if all you think about is AI as your work partner versus your learning partner, I think you miss miss it. And when we talk about like AI is going to replace jobs, it's like, well, generally AI is likely to replace the job you're doing and that you do well, but it may not replace the job you envision or that you know, because you have to keep getting better. And I think that's the biggest thing with all this, right? If you want to be stagnant, you're in trouble, right? If your job is to approve invoices and you have an inbox full of bills and an outbox full of and you're stamping approved or scanning them into something, yes, if that is your ambition and aspiration, I don't know what to tell you.

SPEAKER_03 20:13

Yeah, yeah.

SPEAKER_02 20:15

I've thought a lot about the so what you mentioned about the the the Sapphire Ventures track record of anything that's a hundred percent consensus is investment. I think our part so our partnership dynamic at Shadow is somewhat interesting in that regard because there's three of us, right? So we we either have you know there's a dynamic, like in most cases, it's I think I think it's somewhat hard to get a hundred percent consensus where we're all like absolutely 100%. But but the way our the way we structure our investment committee is like we do need we do need at least two, you know, two two votes out of three in order to move forward on the deal. And usually usually for anything that we've taken three, four, five meetings for, there's two of us that are pretty excited about what's going on. But not not in every case. Like there's been instances where you know one of us is is very one of us is like very enthusiastic and the other two are like, hey, just not you know, not not gonna happen. And I think there's something to setting up an investment committee structure that way. But if you actually think about it, like if you if you if you take that analysis from Sapphire seriously, should you take, you know, should we reduce the the the number of vote the number of votes needed? Like, should it be one of three enthusiastically, but they're like, you know, like it's their it's their stamp of the approval on the deal, like they're signing off on it, they're taking all the you know the live the liability and the risk on it, or does it still need to be you know a a you know, slightly above uh above half of the investment committee that's that's saying yes? Because like you you could say, yeah, the the the more it's in you know a minority viewpoint of the ad at the investment committee, the more interesting it actually could be, you know, from a return standpoint. And I think a lot of venture data actually supports that. But yeah, anyway, I've thought about that dynamic a little bit.

SPEAKER_01 22:11

Yeah, I mean, I think, but but here's the second part of that, right? Now that you know this, then how does your psychology think about how do how do you think about like how does your psychology shift once you understand this fact pattern, the sapphire brought up, right? Do you start changing? Do you start disagreeing more for the sake of disagreeing? Do you have a confirmation?

SPEAKER_02 22:34

I think that would have probably I mean I mean all we deal with is biases, right? Yeah. And I mean I'll say my my my first reaction is to take the to take companies more seriously that that I might have an initially strong reaction to if someone brings it to the investment committee. So if you or Matt brought it to the investment committee and I didn't like it, my my reaction after reading that data is like, oh, okay, I actually should take that a little bit more seriously. Because if I'm having such a strong reaction to it, that might and and and one of my partners who I trust and I you know whose judgment I respect really, really likes it. That's maybe something we should dig into more. And it it might result in me still hating it, but like I think being open-minded about about about the deal, I think that would be my first instinct.

SPEAKER_01 23:25

Yeah. Maybe there's like a new business to have like investment committee moderator, much like a therapist behaves, right? Where it's like, okay, yeah, yeah. I mean, kind of, right? Like to make because sometimes you might sit silent on something. Yeah. Right? Like, hey Nick, what do you think? Well, uh, no, actually, what do you think? Right? I don't know. Look, I think that back to the inventor, we deal with some broad strokes of data, but then ultimately it's a lot of experiential judgment stuff that kicks in, right? I mean, I even think about like, you know, I've seen all these startups lately getting funded that are all doing pre-construction estimating, and I don't understand it. And some of my friends are the investors that are backing these, and they're they're not dumb, right? And so I'm literally, I was like, I went from what is wrong with people to what's right with people? Like, what what is going on that I'm not?

SPEAKER_03 24:27

Yeah, yeah.

SPEAKER_01 24:28

What are they thinking that I'm not? My conclusion, which I'd love for someone to chime in at some point if they know it, is all this all these GCs are buying pre-construction AI. Most GCs subcontract everything. Is this software and this move for GCs to now start self-performing more? Like, are they trying to build better pre-construction chops and capabilities to now be their you know, basically self-perform everything?

SPEAKER_02 24:57

Because incentive structure.

SPEAKER_01 24:59

What's that?

SPEAKER_02 24:59

I think that's the incentive, right?

SPEAKER_01 25:02

Right. I mean, I think that's what's going on. So if I'm a sub, it's like, hey, what's going on? Like, why are these guys, you know, because it used to be like GCs would do in pre-con were really kind of some broad brush pricing, but then they're really like collating and curating pricing and schedule from a bunch of subs. So why all of a sudden all this pre-con? And I think that that has to be the the thing that I I mean, it's the only thing I can think of that I'm missing is that GCs now want to start vertically integrating their business because it's otherwise it's you know, how do you keep growing, right? I mean, if you're a seven billion dollar year construction company, can you grow that much more? Or is it more like, hey, I need to yield more out of my vendor network essentially, and just do it myself. But I think you know, back to your point, like, I mean, how many pre-con deals have we looked at and we're like it's like dude, you're a feature.

SPEAKER_02 25:58

It is it is it is pretty wild the amount of patterns that start to develop with uh with entrepreneurs, you know, downstream of of new technology waves. Like there are just buckets of you know, just you know, there are patterns of activity that just like they absorb all this entrepreneurial energy and and output. And people people just they they they they anchor to them. And it's and it's and it's weird because there's so many opportunities. Like why is everyone why is everyone consolidating and and moving towards pre-construction? Like that's that's like that. I don't I don't quite I don't I don't quite get how everyone arrives at that shelling point. And another example like that I've seen recently where patterns develop is like so autonomy, so like autonomy retrofits right now for heavy construction. There's like variation, there's like 10 variations of that that have that have originated in the past two years. And everyone has like a slightly different spin on it, right? Like bedrock has a different spin than safe AI, and there was a a new company founders fund backed last week. But man, like there, there's a consolidation of energy and activity that's trying to solve that problem when there's you know there's so many other like like my my instinct would be oh, I don't want to go where competition is, I'm not gonna do that if the herd's chasing that. But clearly there's some there was something unlocked that a lot of smart entrepreneurs saw. They saw the trend and they're like, okay, I need to go solve that problem. And like I think in pre-construction, to your point, it just is a it's like there's a convergence of oh, like an aha moment for entrepreneurs, like, oh, now is the time where we because of the data unlock and because of the you know the AI's ability to parse data, we can actually make a really big impact on pre-construction.

SPEAKER_01 27:48

Yeah, but I also think I mean we don't have as much of it, but I think a lot of firms they get calls from LPs, right? They get calls from LPs like, hey, like, did you see so-and-so just invested in X? Are we doing anything in that? And more so in our in our markets where you have strategic investors. Hey, I just got a demo from XYZ company. It's amazing. And so, like, you I mean, like, we do get those calls, right? And we take all those meetings. If a startup hits one of our LPs up and our LPs are excited about it, we look at it. Now, a lot of times, what's our response? Hey, great guy, great idea. You might want to invest directly, but we don't see a venture return. It's probably gonna be a good business. You should consider investing in them if you really like it and you want to have some upside on it. We don't think it's necessarily, you know, it's not gonna have venture economics, so we have to opt out of it. Doesn't make, you know, I don't know how many times a day when I meet with startups that have to explain like if we say no, it doesn't make it a bad business necessarily, and it definitely doesn't make you a bad human being, right? It just means it we don't see a path to venture economics, and that's it, right? And that's it. And a lot of founders can't, they don't, they don't it, they're just like they just heard that we said no, right?

SPEAKER_02 29:15

Yeah, yeah, for sure.

SPEAKER_01 29:17

And a lot of times I'll tell you those founders, they do get funded and they come back to me and say, Hey, look, I got funded by XYZ. I'm like, great, that's a great fit for them. They're not chasing venture economics. Yeah. Oh, this angel group, yeah, fantastic, good for you, man. They're not chasing venture. There's very few angel groups chasing venture economics.

ARR Obsession Fades In AI Era

SPEAKER_02 29:34

Yeah, yeah. All right, next post. You ready? Yeah, for the last decade, we have told startups to be very focused on building ARR. That model changes with the AI. Instead of being focused and trying to get traction with many clients and a narrow problem solution, a founder is better off focusing on a few clients and building an enterprise comprehensive solution for them. Nobody cares about ARR. The client sure doesn't expand.

SPEAKER_01 30:02

Yeah, I mean, I think we've we've all done it, right? Like stay stay in your lane, get focused. I've said it plenty of times. Like, don't even think about a new product or a market till you're five million in ARR. Like we've said all these things, right? And I think there's two reasons why we said it is we know when a founder has a fixed set of resources, people and capital, it's it's not like a feature where it's like, oh, I can incrementally spend a little and get a lot. It tends to be one-to-one, right? If you decide to go into a different market or build a whole new product set, God forbid, a whole new product set for a whole new market, which is the worst, right? But if you're chasing kind of classical adjacencies, i.e. same tech, different market, same market, different tech, right? Which is pretty classical. We've kind of said, like, hey, do you have the money to do that? Or maybe you need to go raise another round to do that, right? Because the general belief system is you might, you know, if you're so think about this same tech, different market. Hey, I'm selling this technology to engineers. I think I can sell it to architects. Great. Incrementally, it's one-to-one to go after that market. There is no real benefit, you know. Yeah, great. You get to reuse your website and add a different landing page. But going after that market's it's like a whole nother motion. And if you said, like, hey, I'm working with engineers to do design work, I want to now do workflow for that same group. Like, that's a different, that's another tech. There's not a lot of scale there, right? It's not like reskin it with a different thing, it's a whole new build. So in either case, the scaling factors are just a massive distraction, right? Now with AI, you can start saying, well, I'm gonna go, I'm working with engineers, let me do a go-to-market with architects, and I can use AI and agents to go do it quickly and cheaply. Or same thing on the code side, right? I can go build something quickly and cheaply to go after that market. So if we think about like distribution and the cost of acquiring a company, you know, we look at all these things like customer acquisition costs, and they're very high for startups. And and what's the payback, right? And the payback is they have to be locked in with you, right? Year after year, month after month, and hopefully year after you're paying, spending a little bit more with you, but your cost to sure serve needs to go down, which I think a lot of these companies, the cost to serve is the same, right? They're not really it's not really happening. So my general feeling is is like the world is different. You can do AI go-to-market stuff, right? You can do uh you can build stuff quickly and prototype things quickly and understand what's going on market. So the the issue has always been, I think for me, is when we talk to our founders and they want to start doing something different, it's a little bit of like, hey, we invested this money to go do the X, Y, and Z. Now you want to take that money and go do A, B, and C. What you really need is to do execute on X, Y, and Z, and then on your next round, get funded to do that next motion, right? And generally speaking, no investors like the these things are never really that simple and natural, right? It's a one-to-one. So so I think that's the shift. And I think you know, I've said this about like SaaS, the whole SaaS business, SaaS is dead. And I'm like, any SaaS company where their customers love and adore the product are fine. You're not gonna get Notion out of my hands, you're not gonna get Slack out of my hands, and you're not gonna get Excel out of my hands over my dead body, right? All the other BS care less, like, you know. So I think the if if you don't have that customer love coming your way, right? Then you just have to be further ensconced with them. Like, what else can I help you with? What else? I mean, I was talking to these guys, the name of the company, they've done really well. I think they're like another unicorn. All they do is sell AI services and consulting into big companies. It's another GC company, I forgot their name. But they're just like hanging out at these banks. And it's like, yeah, we went from doing five projects to a hundred projects in 12 months. And it's like, well, what functional area? They're like, all of them. But their whole point is like, we can spend the rest of our life at Bank of America. We don't need anyone else, right? So if you're a tech startup and you know you're in one of our friends' companies, maybe Hensel Phelps, right? And you're doing this narrow thing and you're doing well, and you have the relationship and back to the human judgment and human factors, right? There's trust. Yeah, go do everything else. Then walk into DPR and do everything else, right? So I think that that might be the shift, right? That's where, and by the way, we we're all allowed to change our minds, right? The environments change, the dynamics change, and I think you know, five, six years ago, yes. You know, I was I was wondering, you know, because we used to always look at craft, you know, craft ventures as like the SAS, you know, they had all these great tools about yeah, they're the SaaS investor, yeah. Yeah, LTV and CAC and all this other stuff. And I mean to all any of those tools, are they just like a waste of time now?

SPEAKER_02 35:25

I think that the entire structure of investing in SaaS has changed for sure. The unit economics of the companies, if you're using inference and compute, just like the margin profile changes pretty dramatically, defensibility changes dramatically. But yeah, I mean, like the I think where where craft stood out is they were basically blindly investing in companies. I mean, I don't maybe blindly uh embellish them, but like they basically said, hey, if you meet this, if you meet these specific metrics, what you check? And I think it was like fairly straightforward, like, hey, if you're doing five million, you know, in recurring revenue and your LTV is this and your CAC is this, and your you know, NRR is this, like you're like signed, sealed, delivered, it's done. But that today, yeah, I don't think that I don't think I think there's way too much uncertainty into the SaaS model to be able to invest like that.

SPEAKER_01 36:15

Yeah, I mean, I was I was joking around, you know, the best way if you wanted to like understand the SaaS market, just run an NPS survey, right? Would you recommend Salesforce to your friend? Yeah, how many of those come back with a yes? I'm not picking on sales. I mean, all of them, right? Yeah, yeah. By the way, in other news, did you see like the CTO of workday quit?

SPEAKER_02 36:36

I did to do what is it is it going to work for anthropic?

SPEAKER_01 36:41

Yeah, to be a senior engineer, individual contributor.

SPEAKER_02 36:44

Incredible CTO to be an individual contributor to anthropic.

SPEAKER_01 36:48

Oh my god, it's wild.

SPEAKER_02 36:50

I didn't read anybody he committed to to yeah to be an engineer. I think I was like, why would he do that?

SPEAKER_01 36:55

It's because he's probably like, I'm all in, man, on this AI thing. Why am I wasting my time at work day?

SPEAKER_02 37:01

That's fascinating.

SPEAKER_01 37:04

I would love to do that.

SPEAKER_02 37:06

He's probably getting probably getting paid more as a senior engineering anthropic than the CEO of assassin.

SPEAKER_01 37:12

We should track him down and have him as a guest. We need to have more guests. We should have guests. I'm totally done for that. We have more guests. I think we should have not industry guests. Sorry, industry people, not industry guest. I think like yeah, I'm I'm we'll see if I can get my one of my friends on. He's um running a they're gonna be on his pod, so maybe he'll reciprocate. He's running a foundation focused on the future of consciousness, okay, like consciousness and machines. Go on, consciousness and machines. Wow, right? Like that's very, very interesting.

SPEAKER_02 37:49

That's fascinating. Yeah, this is a new friend or an old friend, uh new friend. That's what I was guessing. Yeah, I love uh your new friends are making the bear.

SPEAKER_01 38:03

Well, it's not just Silicon Valley friends, right? Because I'm out in farm country, man. Yeah, all my friends are people that are Silicon Valley adjacent, but choose to live with horses and cows and chickens. Yeah, that's a special breed. So like a different uh I don't know what that Venn diagram is, but it's it's it's a fun one.

SPEAKER_00 38:22

They're all they're all honestly, they're all like amazing people too.

Services Revival And PE Rush To SF

SPEAKER_02 38:25

They're yeah, yeah. To finish anyway, to round out the thought on the on the on the SaaS commentary. I saw a company yesterday that just this year, I think honestly in the past six months, they went from one million in recurring revenue, so one million ARR to 61 million in ARR. They raised a new round, hundreds of millions of dollars, right? Of course, all insiders. But like, think about in the previous era, and I think this air this era like memetically gets referred to as like the triple, triple, double, double era, or like that was the goal in your early stage. You know, when you're less than a million, like if you triple triple, and then after that you double double, like you're gonna raise your round. Like that's that was the SaaS definition of growth. But like 60x in a year after you surpass a million, that only happens if you do what you just described. Yep. Like it that would be physically impossible to grow a team that big and scale like that without AI infrastructure and without going like really deep and having massive LTV contracts, right? So it like just seeing that over and over again. And by the way, it is still, it is, it's serve, it's a lot of it's services for sure.

unknown 39:35

Yeah.

SPEAKER_02 39:35

In order to in order to do in order to land, you know,$10 million plus contracts, like you have to do some, there's like, you know, there is some services dynamics about it. But I do think that that, you know, just continued continued examples of of of seeing companies that are that are reaching that sort of growth and scale just supports what you're saying. And like the the it's like the aggregate numbers that we're seeing in terms of in terms of revenue are making like the the the SaaS growth rates just like you know, not not an interesting metric at all.

SPEAKER_01 40:07

Right. So think about this. PE firms were anti-services companies. They're always like, hey, the intellectual property leaves the building every day, right? Like it was it's just a labor arbitrage. Like these were all the reasons why private equity shied away from services businesses, even VCs, right? Oh, services, like right that, but that was that was that that quotable was the IP leaves the building every day. What I would argue with if you're running enterprise cloud or whatever, and you have people working on these systems, you're actually retaining their IP, right? Because the more they are interacting with cloud, the more that they are building deliverables, right? You you don't really run into that, like, hey, Steve left. Where's all that information that Steve had on his drive? Right, it's all kind of building the big brain for the business, and that institutional knowledge that PE companies worried about leaving the building every day is actually being retained and extended, right? And extended. So I think that's an interesting dynamic. But the other thing was I've had all these PE guys come in, fly in to come see me, right? Mostly from all of New York, mostly, right? Every one of them said they're opening up an office in San Francisco. And I was like, really? Like, I for I mean, these are old firms, right? Like, why? They're like the speed at which someone goes from seed to series B, you can't be in New York. You have to be here, it's just too fast. Like, we're we're sitting here getting to know a custom, getting to know an in a company, a founder at their seed round, and then we turn around and they're doing a B.

unknown 41:46

Yeah.

SPEAKER_01 41:46

And we just missed the whole thing. It was like six months, right? Like to your point, that example, right? Yeah. So they're all like saying, No, no, no, we need to be, we need to be in San Francisco because it's just moving too quick. We can't remote control this, which tells you a lot, too, right? That they're all trying to show up here and be in the mix.

SPEAKER_02 42:04

Yeah, fascinating.

Speed To Completion Changes Everything

SPEAKER_01 42:06

All right, last one I got.

SPEAKER_02 42:08

Okay. All right. Work productivity is equal to total output divided by hours worked for AI to be to be 10x effective on productivity, for to have a 10x effect on productivity. You need to consider the math. The one thing it doesn't consider is speed to completion. Why does this matter? Maybe instead of quarterly goals, we have daily goals. Maybe instead of 30, 60, 90 day plans, we have three, six, nine-day plans. All right. So we're back to the theory of relativity to close the podcast.

SPEAKER_01 42:40

I just say it like, I mean, if you think about it, like I don't know, like it's very common, right? I'm hiring new people, a bunch of new people, right? So I'm not picking on any one person. I get a lot of 30, 60, 90 day plans. And that's when I was just like, is that the new timeline, right? Is that the is that is this the new time domain where or it's still incredibly slow?

SPEAKER_02 43:02

I mean, yeah, I know, yeah. I can totally if I got a 90-day plan, I'd be like, huh?

SPEAKER_01 43:08

What happened 90 days ago?

SPEAKER_02 43:10

Yeah.

SPEAKER_01 43:10

Right. I mean, that's how you have to kind of look at it. So I think like I think my point was like you can do the formula around productivity, but if you don't factor in like the speed to market aspect of everything, you know, I think that that's where the math starts to get interesting, right? How fast I launched, I come up with a new idea for a product right now. Actually, you know, yesterday Barry and I we went to this HumanX conference this week. It was very fascinating, like 10,000 AI startups everywhere, like all over the place. Great talks, right? You had CEO of AWS. I mean, we learned a lot, it was really good. But yesterday, Barry and I decided to blow it off and hang out in the office and just like catch up because we never get a day by ourselves. And so we're just like going through a bunch of stuff, and he was like, So we're you know, he's making some key hires. He's like, you're just like, dude, you like create so many proofs of concepts, and some percentage of them are probably like billion-dollar ideas, right? There's some, they're not all of them are great ideas, but we don't know till we know, right? Because I'm on I've been banging things out every day, right? And so, but think about that. If if if I can do a proof of concept and he's gonna like give me some more resources to back me, and I can get an idea into production in a week, and I use my platform of go to market, which is everything I do, right? And I can have it in somebody's Hands in a week, generating revenue in a week. That's the model, right? It's it's days and weeks, it's just can't, I mean, there's quarters and months, and you know, I'll say I'll you know, and so I've also been, and I need to run here in a little bit, but I've also been this like anti-process person lately. And and the main reason is we develop, and I talk about this in my book, and Jack Dorsey may have read my book, but he talks about the death of middle management. It's a whole spot in my book about this, right? But a lot of it was, you know, my point was like the whole GE thing and deming. I think I have a chapter called Deming Would Be Rolling in His Grave, right? We've measured and optimized so many things that we measure everything, which means everything has to be apples to apples. We have to build a process for everything, repeatable process. I'm like anti-repeatable process these days. I think repeatable process is the fastest path to mediocrity. And it made sense when we didn't have the tools. But these days, like, why do you have to have a repeatable process when Claude will develop a specialized process, right? And you can deploy that. And so I think that's the problem. Like everybody is optimizing towards these time horizons that are old numbers. They're optimizing towards, oh, let me build a process, right? I mean, the other day I just like went on a rant, dropped it into Claude, told it to map, told it to map it out in mermaid, and I was like, here's a new process. Now, does that process need to have infinite state? Or is it temporary? Is it just you know, you know, it's like in in tech everybody uses the term scaffolding, and in construction we use the term scaffolding. Is everything just scaffolding now? Yeah, it's interesting.

SPEAKER_02 46:21

I think the the burden of process, I think, due to the models, can now the the burden of process can now be taken off our shoulders. And the and the and the LLMs can just they can, you know, they can have that, they can hold that memory, they can hold the burden of process. That's what they're good at, right? As as memory gets better and better, and they can iterate on that. They don't, you know, they don't have to to to stay and stick to single scaffolding, right? Like it's anything that's that's iterative and works better, they should explore that too. But like it feels like to me, as I, you know, and in my in my workflows, like I've offloaded the burden of process, right? We're just communicating, we're just informing, you know, how they should think about the initial process and then and then they run with it, right?

Ditch Vanity Metrics Track Cash

SPEAKER_01 47:11

Yeah, I mean, think about the simplest of things: sales pipeline. Sales pipeline, dumbest thing ever to spend time on. Because ultimately, and unless you have millions of data points and millions of process, the predictability of a sales pipeline and how your sales pipeline will convert to revenue is mostly fiction. What does it end up coming down when you're doing pipeline review? When you don't have a million sets of data every month to map against, you're like sitting down with the sales manager sitting down. So tell me about this. How do you think this month, this quarter is going to shape up? How do you think this month is going to shape up? Well, I thought I just put everything in Salesforce. I just put everything in HubSpot. Don't you already know? It's like, no, but I need to actually know. So, how much time are people spending building funnels and MQLs and SQLs and trying to build this amazing like process pipeline around these things? I mean, how many mother, how many more like ABM strategy and this strategy and like why? Like, right? And we did all these things to create some level of methodology and process and repeatability to get a better understanding of things. But you know, lately, like you know, like my email stuff, like my MailChimp newsletter and all that. I just have quad connected to API. And I'm like, tell me how we did this week. What give me some recommend, give me some recommendations what I should do for next week. Because ultimately that's all I want.

SPEAKER_03 48:39

Yeah.

SPEAKER_01 48:40

I don't, I mean, I don't want the charts and graphs, like who cares?

SPEAKER_03 48:44

Yeah.

SPEAKER_01 48:44

Right. And and you you've been in marketing for a long time. Think about how much vanity data that people somehow build business cases around, right? Yeah, yeah. We've had this many free users sign up this month. Great. So what?

SPEAKER_02 48:57

Here's our impressions for this month, here's our engagement numbers. Isn't that isn't that enough? Isn't that good?

SPEAKER_01 49:04

Yeah. You know, the only metric anyone should be measuring cash on cash. Cash on cash. Yes, you hit refresh on your bank account every day or every hour. Is it going up or is it going down? And like, how's it trending? What's the trend line of your cash? Everything else is, I think, just kind of pictures.

SPEAKER_02 49:23

Yeah.

SPEAKER_01 49:23

Anyway, man, great catching up.

SPEAKER_02 49:25

Good note to end on. All right.

SPEAKER_01 49:27

All right, man. Talk to you.

unknown 49:28

Bye.